Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

MESSAGE FROM THE QUEEN

REVOLUTIONS OF 1688–89 (TERCENTENARY)

The Lord President of the Council and Leader of the House of Commons (Mr. John Wakeham): reported to the House, That Her Majesty, having been waited upon, pursuant to the order of 7 July, humbly to know Her Majesty's pleasure when she will be attended by this House, has been pleased to appoint to be attended on Wednesday 20 July at 11 o'clock in Westminster Hall, and has given her permission for this House to be accompanied by representatives of overseas Parliaments of the Commonwealth.

Commonwealth Speakers Conference

Mr. Speaker: As the Leader of the House has reported, the Address celebrating the tercentenary of the revolutions of 1688–89 and the Bill of Rights and the Claim of Right will be presented to Her Majesty in Westminster Hall on Wednesday 20 July. That ceremony will also be attended by the Speakers and Presiding Officers of 35 Commonwealth Parliaments. They will be in London at the invitation of the Lord Chancellor and myself to take

part in the ninth conference of Commonwealth Speakers and Presiding Officers, which will be held in the Queen Elizabeth II conference centre during the remainder of that week.
As Speaker of the host country it falls to me to preside over the conference. My duties at the conference and towards our Commonwealth visitors will to some extent restrict my appearances in the Chair during the period 20–22 July, and I hope that I may have the understanding of the House that this will be so.

PRIVATE BUSINESS

BRITISH RAILWAYS (No.2) BILL(By Order)

Order for consideration read

To be considered on Thursday 21 July.

TEIGNMOUTH QUAY COMPANY BILL (By Order)

York City Council Bill [LORDS] (BY ORDER)

CARDIFF BAY BARRAGE BILL (By Order)

FALMOUTH CONTAINER TERMINAL BILL (By Order)

NEWCASTLE UPON TYNE TOWN MOOR BILL [Lords](By Order)

PORT OF TYNE BILL [Lords] (By Order)

AVON LIGHT RAIL TRANSIT BILL [Lords] (By Order)

Orders for Second Reading read.

To be read a Second time on Thursday 21 July.

BREDERO (BON ACCORD CENTRE ABERDEEN) ORDER CONFIRMATION BILL

HIGHLAND REGION (LOCHINVER HARBOUR) ORDER CONFIRMATION BILL

Read the Third time, and passed.

Oral Answers to Questions — NATIONAL FINANCE

Third World Debt

Mr. Franks: To ask the Chancellor of the Exchequer what discussions took place at the Toronto economic summit relating to Third world debt; if there will be an increase in aid to less developed nations; and if he will make a statement.

The Chancellor of the Exchequer (Mr. Nigel Lawson): An agreement was reached at the economic summit in Toronto last month, along the lines of the initiative that I launched in April last year, to reduce the debt burden of the poorest, most heavily indebted countries, mainly in sub-Saharan Africa, which are following approved economic policies.

Mr. Franks: Does my right hon. Friend accept that Britain's role in securing that agreement was decisive? Will he continue his efforts to ensure that the agreement is implemented as soon as possible?

Mr. Lawson: Yes. I am grateful to my hon. Friend for what he has said. It has been our persistence, since I launched the initiative in Washington at the interim committee meeting in April last year, which I believe allowed us to get the agreement in Toronto, which is of the first importance for the heavily indebted poorest countries of sub-Saharan Africa. Earlier this week there was a meeting of senior officials, under the aegis of the Paris Club, at which a substantial amount of agreement was reached on the nuts and bolts. I hope that, as my hon. Friend has said, it will not be too long before the agreement can be implemented.

Mr. Tony Lloyd: Does the Chancellor recognise that the cost of debt, particularly in Latin America, can be measured directly in jobs lost in this country through lost exports? What steps will he now take to ensure positive action by the richer nations of the world to ease the debt problems of Latin America?

Mr. Lawson: The middle-income debtors of Latin America indeed have substantial debts. It is a great problem, which has been there since 1982. During that time we have had a well-developed debt strategy for dealing with the problems, but it is not just a matter of the International Monetary Fund taking a lead, as it does very valuably, or of the commercial banks rescheduling debts, which they are doing. It is also vitally important for those countries to put their own economic houses in order.

Mr. Lester: I welcome the additional information that my right hon. Friend has been able to give about recent action in the Paris Club. Can he tell how long it will be before its members will be in a position to implement the scheme that his energies have helped to create, and what scale of benefit we may expect to see for those poorest countries?

Mr. Lawson: I pay tribute to the part that my hon. Friend has played in the House in consistently drawing attention to these matters. I cannot tell him how long it

will take, but we are going ahead as quickly as possible; and the fact that the special meeting was held at the Paris Club earlier this week is an indication of that.
As for the benefit for the poorest countries, it is difficult to say. It will build up over a period. It could, however, eventually add up to as much as $500 million a year if the countries concerned participate fully in their proper economic adjustment programmes.

Mr. Holland: The Chancellor's debt strategy may well develop, but it is not very athletic. Surely he realises that, as was pointed out by my hon. Friend the Member for Stretford (Mr. Lloyd), up to a quarter of a million jobs have been lost in the export sector in the United Kingdom since 1981 alone because of the Latin American debt crisis.
As for sub-Saharan Africa, why did the Chancellor not respond to the challenge and invitation issued by the new French Government and President Mitterrand to write off one third of the debt of the 20 least developed African countries? Surely he recognises that it is time to act on debt rather than talk. Otherwise, we shall neither resolve the crisis for the countries concerned nor restore British export trade.

Mr. Lawson: I am astonished at the ill-informed nature of the hon. Gentleman's comments. We have done far more in connection with writing-off old aid loans than France. However, I do not want to enter into competition, because the United Kingdom and France have been working very closely together on the initiative on which agreement was reached in Toronto and which was further discussed at the Paris Club this week.
As for unemployment, I am astonished that the hon. Gentleman should mention it without welcoming today's figures, which show that unemployment in this country has fallen by well over half a million since the general election alone.

Sir William Clark: I congratulate my right hon. Friend on his welcome initiative. Does he agree, however, that it is the height of irresponsibility to promise a massive increase in aid when, if the Labour party ever regained office, our economy would be in such a parlous state that we would not be able to afford an increase in aid, and might not even be able to afford the aid that we now provide?

Mr. Lawson: My hon. Friend is right. It is very easy for the Opposition to say, as they do, that they will increase aid. The Leader of the Opposition—who at present is safely away from these shores—has said that they will increase it by two and a half times, and raise the basic rate of income tax by 2p to pay for it. But, of course, if there were ever another Labour Government the economy would be in such dire straits that I doubt whether even a 2p increase in income tax would be sufficient to pay for it.

Balance of Payments

Mr. Winnick: To ask the Chancellor of the Exchequer if he will make a statement on the current balance of payments position.

The Economic Secretary to the Treasury (Mr. Peter Lilley): In the first five months of this year the current account deficit was estimated at £4·7 billion.

Mr. Winnick: Does the Minister admit that the figures for May were absolutely appalling—the worst monthly figures on record for any period? Is not the deficit for the first five months of this year three times the size of that for the whole of 1987, and are not all the indications that the position will worsen? Is this the foundation for what the Chancellor calls our economic recovery?

Mr. Lilley: The hon. Gentleman should recognise that there is all the difference in the world between a country that is running a deficit on its payments when it has a surplus on its public finances, and one that is running a deficit that reflects not the growth of investment domestically but a deficit that its Government are running, as the Labour Government that the hon. Gentleman supported produced for this country.

Mr. Tim Smith: Is it not inevitable, when the latest Department of Trade and Industry intention investment survey projects a 16 per cent. rise in manufacturing investment, that that should be reflected in our import figures? Do not those figures, and the excellent figures from the Department of Employment today, which show that manufacturing productivity is continuing to rise by 6 per cent., offer the best hope for continuing improvement in our competitiveness?

Mr. Lilley: My hon. Friend is right. The investment boom to which he refers also shows up in the import figures. In the past three months the growth in imports of investment goods was about 19 per cent. and that of consumption goods only about 10 per cent.

Mr. Gordon Brown: Is not the most worrying aspect of the high interest and high exchange rate policy now being pursued, not only that the Chancellor will be the first Chancellor in history to preside over a manufacturing trade deficit in excess of £10 billion, but that the trade deficit is deteriorating sharply in the new industries on which our industrial future depends—computers, information technology and electronics—where it is estimated to be £2 billion alone? Will the Treasury now honour the promise made by the Minister for Trade yesterday in the House to publish the revised forecasts for the balance of payments deficit and publish the forecasts for this year and for next year, or is it too ashamed of the real figures even to do that?

Mr. Lilley: My right hon. Friend has said that he will publish the revised forecasts in the normal way in the Autumn Statement as required under the Industry Act. The hon. Gentleman's presentation of the position of British manufacturing industry is grotesque, particularly in a week when we have heard that Britain has won the largest export order of manufactured goods ever. Clearly, that is not a sign that we are doing badly.
As for the overall picture of gloom and doom painted by the hon. Gentleman, it is clear that he does not really believe that there is a serious problem because the policies that he advocates are precisely those designed to create a real balance of payments problem.

Manufacturing Profitability

Mr. Hunter: To ask the Chancellor of the Exchequer what is his estimate of the rise in manufacturing profitability in 1987.

Mr. Curry: To ask the Chancellor of the Exchequer what is his estimate of the rise in manufacturing profitability in 1987.

The Chief Secretary to the Treasury (Mr. John Major): Manufacturing profitability is estimated to have risen by about 1½ percentage points in 1987 to 8½ per cent., the highest level since the beginning of the 1970s.

Mr. Hunter: Does my right hon. Friend's answer not highlight one of the many strong features of our economy, as without profitability there can be no expansion through reinvestment, and without that expansion there can be neither the job nor the wealth creation to finance our welfare and social programmes?

Mr. Major: My hon. Friend is entirely correct. The fruits of that success have been shown in expenditure programmes over recent years. In addition, profitability has risen each year since 1981, and that is a most welcome trend.

Mr. Curry: Are not improved industrial relations contributing substantially to improved profitability? Is it not therefore particularly silly and reactionary for the Trades Union Congress to seek to drive out from its ranks those unions willing to conclude single union agreements, to the great benefit of the company for which they work, the real earnings of their own work force and employment?

Mr. Major: I entirely agree with my hon. Friend, but it would be indelicate for me to intrude in the misery of the trade union movement.

Mr. Nigel Griffiths: Does the right hon. Gentleman agree that a major threat is posed to manufacturing profitability by the high pound and high interest rates, which are estimated to cost £600 million this year?

Mr. Major: Profitability frequently depends on competitiveness, and competitiveness is best measured by performance. British industry is performing better today than it has done for many years.

Ms. Armstrong: Will the Minister encourage some of that profitability to be reinvested, particularly in research and development? We still have a shocking record of investment in research and development in this country, particularly in the northern region, and we need that research and development to ensure future capacity in manufacturing and in the real economy, which will produce the jobs and the prosperity of the future.

Mr. Major: I have some sympathy with what the hon. Lady says. There is a substantial amount of public sector investment in research and development, and I would welcome increased private sector investment in research and development. I hope that that forms part of the significant investment boom that we are now seeing.

Productivity

Miss Widdecombe: To ask the Chancellor of the Exchequer what has been the average annual increase in the productivity of the whole United Kingdom economy since 1980.

Mr. Major: Since 1980 output per head in the whole economy has grown at an average rate of 2¾ per cent. per year, about the same as Japan and faster than any other major industrialised country.

Miss Widdecombe: Will my right hon. Friend tell the House how far the increase in productivity compares with our performance in the 1960s and 1970s and with that of our competitors over those years?

Mr. Major: The improvement in productivity is greater now than at any stage in recent years, including the 1960s. The most effective recent comparative figures are that growth has been averaging 2¾ per cent. per annum since 1980, compared with a growth pattern between 1973 and 1980 of only 0·7 per cent.

Mr. Campbell-Savours: Why is the increase in productivity linked to such a massive balance of payments deficit? Is not the problem for the Chancellor of the Exchequer that he cannot leave his job next year? He is locked into his appointment because he is scared stiff of leaving a balance of payments deficit.

Mr. Major: I congratulate the hon. Gentleman on the ingenuity of his question. I share his wish that my right hon. Friend the Chancellor of the Exchequer will remain Chancellor for a considerable period. As my hon. Friend the Economic Secretary to the Treasury said, the deficit on the balance of payments and the balance of trade reflects partly a strong growth in domestic activity. It reflects also —this is material to manufacturing—the fact that a great deal of the import growth relates to capital, semi-capital and intermediate goods, which are being imported as part of the investment boom.

Sir John Stokes: Good as the figures are for manufacturing productivity, is my right hon. Friend not a little concerned about the large rise in wage rates? If they continue, they could threaten our economic growth.

Mr. Major: I share my hon. Friend's concern about the rise in wage rates, not least because we wish to see the dramatic reductions in unemployment continue. The rise in wage rates in part reflects overtime earnings and productivity bonuses, and that we welcome.

Imports (Tax Cuts)

Mr. Clelland: To ask the Chancellor of the Exchequer if he will estimate the impact of top rate tax cuts on imports.

The Paymaster General (Mr. Peter Brooke): The elimination of the top rates of tax over 40 per cent. will improve economic performance and thus lead to higher living standards all round.

Mr. Clelland: Will the Minister confirm that Britain's balance of trade in cars with West Germany has deteriorated more sharply than any other part of the balance of trade since 1979? Will he also confirm that his £2 billion tax give-away to those on the highest tax rates will find its way into the purchase of BMWs, Audis and Porsches, which will further deteriorate the balance of trade in cars?

Mr. Brooke: The hon. Gentleman has asked me a rather long question, especially if the terms of it are taken back to 1979. He referred to the current balance of payments

deficit. He should realise that the increase in investment goods imported is considerably larger than the increase in consumer goods imported.

Mr. Latham: Less than two years ago imports were lower, the economy was stagnant and in recession and tax rates were much higher. Were the Opposition whingeing then as well?

Mr. Brooke: My hon. Friend is right.

Mr. Chris Smith: Is not personal consumption the highest import content of any economic activity within the economy? If so, why did the Chancellor of the Exchequer decide in his Budget to place such emphasis on top-rate tax cuts? Those cuts will undoubtedly fuel consumption rather than investment in our infrastructure and worsen the already bad balance of payments position. Will the Minister now answer the question that was put to him earlier this afternoon by my hon. Friend the Member for Dunfermline, East (Mr. Brown)? Will the balance in manufacturing trade reach a deficit of£10 billion this year?

Mr. Brooke: The hon. Gentleman's question linked a series of hypotheses. I continue with the observation that I have just made. In terms of the current balance of payments deficit, the increase in investment goods imported is rising much faster than the increase in consumer goods.

Inflation

Mr. Greg Knight: To ask the Chancellor of the Exchequer what is his latest estimate of future inflation.

Mr. Andrew MacKay: To ask the Chancellor of the Exchequer if he will make a statement on the current level of inflation.

Mr. Lawson: The rate of inflation in May stood at 4·2 per cent.

Mr. Knight: Despite some signs that the economy may be starting to overheat, is my right hon. Friend aware that Conservative Members, and most of the country, have absolute confidence in his ability to keep our economic progress on course? But will he give the House an unequivocal undertaking that in no circumstances will he accept advice from the Labour party, bearing in mind that in August 1975 inflation hit a 20th century peak of 26·9 per cent. under a Labour Government?

Mr. Lawson: I am grateful to my hon. Friend for his earlier remarks. The annual rate of inflation under Labour in August 1975 of 26·9 per cent. is an interesting figure, because in that one year inflation was more than in the past five years put together. However, I can assure my hon. Friend that I am still not satisfied with the rate of inflation in Britain and, despite the fact that it is only a fraction of what it was under the Labour Government, I am determined that we shall get it down, and our policy will be directed to that end.

Mr. MacKay: As we have been told that today's Cabinet meeting has reached a decision on total public expenditure for the coming years, can my right hon. Friend confirm that the rate of inflation will influence the next expenditure round?

Mr. Lawson: Yes, indeed. My hon. Friend is right. One of the fundamental reasons for Britain's economic success has been our firm control of public expenditure, which has fallen steadily as a share of GDP since 1982–83. In the Cabinet this morning we reaffirmed that strategy and agreed that public expenditure should continue to fall as a share of GDP throughout the next three years.

Mr. Alton: Despite what the Chancellor says about economic success, does he agree that today's Trustee Savings Bank report on the economic indicators in Northern Ireland demonstrates just how patchy that recovery is? For instance, in Northern Ireland last year employment in manufacturing industry fell by 1·3 per cent. and output is only now reaching 1979 limits. Does he agree that the overheated economy in the south-east of England contrasts with those less prosperous regions of the United Kingdom, where unemployment is still the major problem facing the people living there?

Mr. Lawson: I must confess that I have not read the latest TSB report, but the hon. Gentleman is somewhat mistaken. First, on the question of Northern Ireland, as he is well aware, that unhappy Province has particular problems of its own which are not purely economic—indeed, not economic in origin at all—but obviously have a great bearing on the economic performance of the Northern Ireland economy. However, the figures that have been published hitherto for Northern Ireland may have understated the growth of output in the Province. The hon. Gentleman will welcome today's excellent unemployment figures, which show not only a further massive fall for the 23rd month in succession, but that the biggest fall of all has been in the west midlands, the north-west and the north of England.

Mr. Robert Sheldon: Will the Chancellor of the Exchequer explain something that is puzzling many people: why, whenever inflation in goods and services is low he takes credit for it, but when we have a historically high level of inflation in house prices he says that it is due to something else?

Mr. Lawson: I did not know that there had been any discussion today about inflation in house prices. House price inflation is a different matter from general price inflation. [Laughter] If Opposition Members laugh, that only shows their ignorance. Let them explain how it is that, while inflation in Japan is very close to zero, property prices in Tokyo and Osaka have risen far faster than in London.

Mr. John Townend: Further to my right hon. Friend's reply to my hon. Friend the Member for Berkshire, East (Mr. MacKay) about the current danger of overheating in the economy, will he confirm that the Cabinet today decided not to exceed in 1989–90 the amount laid down for public expenditure in the medium-term financial strategy? Will he confirm that it would be dangerous if public sector wage settlements for the coming year exceeded inflation?

Mr. Lawson: What we agreed was wholly consistent with the pledge in our election manifesto last year. Public expenditure for the coming three years should be kept as close as possible to the planning totals, and public expenditure should continue to fall as a share of GDP throughout the next three years. My hon. Friend is right in saying that that pay settlements, both in the public and the

private sector, have a very important bearing on the public expenditure totals, and, indeed, on the performance of the economy.

Mr. Nicholas Brown: May I drag the Chancellor away from the problems of the Japanese housing market and his reminiscences of the last Labour Government to discuss inflation? Does he agree that the largest single pressure on the retail prices index is the 11 per cent. price rise in electricity, the 10 per cent. price rise in water charges, the 12 per cent. price rise in rates and the 6 per cent. overall rise in gas prices? Those are all in the public sector and the Government should take responsibility for them. What will the Government do to curb that sort of inflation?

Mr. Lawson: All the matters that the hon. Gentleman has mentioned are taken into account in the retail price index, which has gone up by 4·2 per cent., according to the latest figure. However, rate increases are the responsibility, not of the Government, but of Socialist councils up and down the country.

Indirect Tax Rates

Mr. Heathcoat-Amory: To ask the Chancellor of the Exchequer if he has any plans to approximate indirect t ax rates to the European Community average.

Mr. Lilley: No, Sir.

Mr. Heathcoat-Amory: Does my hon. Friend agree that the EEC Commission proposal to harmonise VAT rates throughout the Community is based on the fallacy that different rates distort competition? Will he point out to the Commission that that is not the case, because VAT is a tax on consumers, not on production costs, and that businesses can reclaim VAT? Does my hon. Friend agree that the EEC Commission might find it inconvenient and untidy to have different rates of tax in different parts of the Community, but that that hardly justifies an assault on the tax powers of individual Parliaments?

Mr. Lilley: My hon. Friend is absolutely right in saying that VAT causes no distortions of commercial trade, because it applies equally to imported and domestic goods, and requires comparatively limited border control. The only distortion is cross-border shopping. The European Commission's proposals to deal with that are rather misconceived. That is perhaps better solved by liberalising controls on cross-border shopping, and then leaving market forces to constrain individual countries through the rates of VAT that they choose to apply.

Mr. Win Griffiths: Will the Minister confirm that all those goods and services that are currently zero-rated will continue to be so rated for the foreseeable future?

Mr. Lilley: I can confirm that the British Government will not allow their powers to retain zero rates to be constrained by the EEC.

Mr. John M. Taylor: Does my hon. Friend agree that the lesson of the United States of America is instructive? In that single market individual states are free to levy their own rates of indirect taxation. The outturn is that market forces are the ultimate constraint on those rates.

Mr. Lilley: My hon. Friend is absolutely right. That illustrates that it is quite unnecessary to constrain the sovereign power of individual countries to set their own


indirect tax rates. It would be paradoxical if the member states of the European Community had less power in this respect than the individual states of the United States of America.

Dr. Marek: Will the Economic Secretary state here and now that there will be no VAT on transport, books, newspapers and periodicals? If he will not, does he realise that these items will then be the subject of some shabby horse-trading in a smoke-filled room some time in 1992 when the Common market comes to make its compromises?

Mr. Lilley: I have made it absolutely clear already that we shall not concede our right to retain the zero rate on any products on which we already have it.

Economic Output

Mr. Thurnham: To ask the Chancellor of the Exchequer what has been the growth in economic output during the last 12 months; and if he will make a statement.

Mr. Lawson: Over the 12 months to the first quarter of 1988 total output grew by 5 per cent.

Mr. Thurnham: I welcome today's fall in unemployment, which marks the longest continuous period of falling unemployment since the war. Does this not provide convincing evidence of the much greater success of this Government's economic policies than any of the policies that were ever adopted by the Opposition?

Mr. Lawson: My hon. Friend is absolutely correct when he refers to today's excellent figures for unemployment and employment. He might also have a look at today's figures for manufacturing output, which show that it is some 6½ per cent. up on a year ago and that this is the fastest rising sector of the economy.

Mr. Skinner: Can the Chancellor of the Exchequer explain to the House why it is that, on another economic output front—the invisibles, which in election year were running at £700 million a month—had fallen to £400 million a month in the first three months of 1988? There is a point of view that these figures were fiddled during election year to assist the balance of payments during that year. Will he take into account the fact that if that £400 million continues throughout 1988 it will produce another £2 billion deficit on his balance of payments?

Mr. Lawson: I must say in all seriousness to the hon. Member that the figure for the balance of invisible trade, which is frequently revised in both directions by the Central Statistical Office, is worked out totally independently by that office. He has cast a very serious slur on the Central Statistical Office and the civil servants who work for it, and I hope that he will withdraw it.

Sir Dudley Smith: Is my right hon. Friend aware that the west midlands is working again, producing again and making profits again? Does this not speak volumes for the policies of my right hon. Friend and the Government?

Mr. Lawson: Yes, indeed, and as an east midlands Member I am delighted to see the rapidly growing prosperity of both the east and west midlands. It is one of the most encouraging aspects of the remarkable growth

that we have had in this country over the past five years and more that it is now being seen in all parts of the economy.

Interest Rates

Mr. John Evans: To ask the Chancellor of the Exchequer if he will estimate the cost to manufacturing industry of the cumulative rise in interest rates since 1 June.

Mr. Lawson: Bank base rates currently stand at 10 per cent. This is roughly in line with the average level of interest rates during the last five years, during which manufacturing output has increased by over 20 per cent.

Mr. Evans: Does the Chancellor accept the CBI's figures, which show that the five interest rate increases that we have had since 1 June have cost industry about £25 million, that industry is now bearing the brunt of his policies and that in the long term his policies, which might prove beneficial to financiers in the City of London, are proving disastrous for what is left of manufacturing industry in Great Britain?

Mr. Lawson: The hon. Member really is living in a world of his own. If he were to go out into the real world, if he were ever to meet anyone in manufacturing industry, if he were ever to see inside a manufacturing company, he would realise that manufacturing industry is doing better than ever before. Manufacturers know this and acknowledge it.

Mr. Duffy: Given the Chancellor's earlier reference to the Tokyo property market, is he prepared to say that the Prime Minister's insistence on tax encouragement to wealthy people to buy high-priced dwellings, thereby unnecessarily boosting credit, is not bringing his interest rate policy at some point into conflict with noninflationary growth and jeopardising the investment plans of manufacturing industry at its lower, smaller end?

Mr. Lawson: At the time of the Budget I felt that there was a case for cutting back on the extent of that sort of credit. That is why I removed the multiple mortgage relief for sharers and abolished altogether the relief on home improvement loans. I am not sure whether the hon. Gentleman voted for those clauses. I seem to recall that he did not.

Mr. Charles Wardle: Is it not the case that the increased interest cost to manufacturing industry can largely be offset by sensible wage settlements?

Mr. Lawson: Yes, my hon. Friend is right.

Mr. Yeo: Does my right hon. Friend agree that industry is more concerned about the level of inflation than the level of interest rates and that there is widespread recognition of his successful use of interest rates as a means of keeping inflation down?

Mr. Lawson: My hon. Friend is absolutely right. It is something that I have said time and time again. I have shown by my actions that interest rates will be set at whatever level is necessary to bear down on inflation.

Currency

Mr. Canavan: To ask the Chancellor of the Exchequer what recent assessment he has made of the popularity of the various coins and bank notes in current usage.

Mr. Brooke: The Government recently reviewed the United Kingdom coinage following a successful public consultation. The most popular option included smaller 5p and 10p coins, which will be introduced in the early 1990s. The Bank of England is responsible for the note issue, which it keeps under careful review.

Mr. Canavan: Can the Minister tell us one other country in the world, apart from England, whose lowest value bank note is as high as £5 sterling or equivalent? If the Bank of England is so insensitive to public opinion that it refuses to give people a choice between a pound note and a pound coin, why not make Scottish bank notes legal tender throughout the United Kingdom instead of forcing people to use unwieldy pound coins which are so heavy, so thick and so unpopular that they remind me of a certain person on the Treasury Bench?

Mr. Brooke: The hon. Gentleman has made much more pithily the speech that he made on 8 July 1986 in proposing his Bill about the Scottish pound note. His abbreviation today was admirable.

Overseas Assets

Mr. Jacques Arnold: To ask the Chancellor of the Exchequer if he will give the latest figures for the stock of United Kingdom net overseas assets both in value and as a percentage of gross domestic product.

Mr. Major: The United Kingdom's net overseas assets were estimated at some £90 billion at end-1987, about 21 per cent. of gross domestic product.

Mr. Arnold: Does my right hon. Friend agree that the figures are an excellent measure of the restoration of the economic strength of Britain in the world? Would he care to comment on the effect that the return on those investments has on the British economy at present?

Mr. Major: I agree entirely with my hon. Friend's first point. On the second point, those overseas investments brought in nearly £6 billion in annual income in 1987, the highest level ever recorded. The returns from the first quarter of 1988 suggest a similar return this year.

Third World Debt

Miss Lestor: To ask the Chancellor of the Exchequer what is Her Majesty's Government's policy towards the Japanese Government's proposals at the Toronto summit to, in effect, turn part of the commercial bank debt into Government bonds and to ease the amount of debt payments.

Mr. Lilley: These complex proposals were not discussed at Toronto and still need to be clarified.

Miss Lestor: Bearing in mind that, as a proportion of GNP, aid from Britain to the Third world is now at its lowest ebb, debt becomes an important part of easing the burden of those countries. Also bearing in mind that the Japanese proposals relate particularly to middle-income

countries, where malnutrition is rising and whose incomes are falling, could not the Chancellor be persuaded to look more closely at the Japanese proposals, which have a contribution to make?

Mr. Lilley: I would have hoped that the hon. Lady, who takes a great interest in these matters, would pay tribute to my right hon. Friend's success, through his dogged persistence, in achieving agreement at Toronto on the initiative to help the sub-Saharan African countries, which is a major and important priority. We shall, of course, consider in detail any proposals that the Japanese put to us. As we see in the hon. Lady's question, she has misinterpreted what the proposals probably are.

Privatisation

Mr. Darling: To ask the Chancellor of the Exchequer what is his current estimate of Treasury receipts from sales of public assets in 1988–89, 1989–90, 1990–91 and 1991–92, respectively.

Mr. Brooke: The latest estimate of privatisation proceeds is shown in the Government's public expenditure White Paper.

Mr. Darling: Has the Chancellor made an assessment of the likely price for the electricity industry if it is sold off, and has he made any assessment of the amount that is likely to be bought by foreign interests rather than by people living in this country?

Mr. Brooke: The public expenditure White Paper estimated proceeds, to which I referred, cover a period of years. The programme which will follow hereafter will undoubtedly sustain those estimates.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Tredinnick: To ask the Prime Minister if she will list her official engagements for Thursday 14 July.

The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall be having meetings later today.

Mr. Tredinnick: Does my right hon. Friend agree that it is remarkable that Mr. Gorbachev should look to her and to a Conservative Administration rather than to a Socialist Administration for ideas and inspiration? Does she further agree that, whereas the Russians were delighted to stop jamming so that millions could hear her across Russia, they are most unlikely to do the same for the Leader of the Opposition?

The Prime Minister: I agree with my hon. Friend. I think that the Soviet people wish to hear about successful policies. They want to get away from failed Socialism.

Mr. Hattersley: Will the Prime Minister give a categorical assurance that every regional health authority will receive sufficient additional Government funds to meet the cost of the nurses' pay award and the regrading which she promised to finance in full?

The Prime Minister: The Government have made available £566 million additional to the extra amount of £237 million already in the forecast for the nurses' pay award this year. This includes the whole of the estimated cost of the clinical grading exercise put forward by the Nurses' Pay Review Body.

Mr. Hattersley: The Prime Minister must try to grasp the question, because she has chosen to answer one which I did not ask. So I ask her again: will every regional health authority be given sufficient additional funds to meet the cost of the new pay bill, because five of them understand that they will be left short in October? Yes, or no.

The Prime Minister: The amount that has been made available was the amount that was estimated by the Nurses' Pay Review Body. That full amount has been put forward [Interruption.] The formula used for estimating the total sum required was agreed between representatives of National Health Service chairmen and the review body. That amount is intended to be the amount which they said regrading of the structure would cost.

Mr. Hattersley: The sum was not agreed, but the Prime Minister's error of fact is not the matter at issue. The issue is that unless every regional health authority can be sure of its ability to meet the increased pay bill there will be closed wards and bed cuts—five authorities say that. Does the Prime Minister not understand that, or does the Cabinet, insulated by private medical care, not care what happens in the Health Service?

The Prime Minister: No, £803 million was the figure estimated not by the Government but by the Nurses' Pay Review Body. [Interruption.] Perhaps the right hon. Gentleman, instead of trying to make trouble—[Interruption.]

Mr. Speaker: Order.

The Prime Minister: Perhaps the right hon. Gentleman would first read the letter of 13 July 1988 from Mr. Trevor Clay—[HON. MEMBERS: "Read it."] I shall gladly read it out, but I thought that the Deputy Leader of the Opposition might be able to read it for himself. Mr. Clay said:
There are many problems at local level. But some managements are succeeding in some districts. Why can't others make the same speed?
Secondly, perhaps the right hon. Gentleman will remember that it was his Government who cut nurses' pay, whereas this Government have increased it. He is the cutter of nurses' pay.

Mr. Batiste: What hope can my right hon. Friend offer to the many air travellers stranded at British airports that their plight, caused by air traffic control problems over Europe, will not get progressively worse in the years to come? What initiative can the British Government take with their European partners to provide a long-term solution to the problem?

The Prime Minister: We shall certainly have a look at that. My hon. Friend asked about our air traffic control. As he is aware, we have been trying to get the very latest computers, which should be sufficient and well able to cope with the increase in air traffic control needs. We shall have a look at the co-operation, which I am sure our air traffic controllers have, and need to have, with other air traffic control authorities.

Mr. Kennedy: To ask the Prime Minister if she will list her official engagements for Thursday 14 July.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Kennedy: Does the Prime Minister concur that those Conservative Back Benchers who voted against the European Communities (Finance) Bill earlier this week in all likelihood share her gut instinct? Given that she seems to occupy an increasingly ambivalent position at home, and an increasingly isolated position within the Community on greater financial integration, will she concede that the net outcome is likely to be final confirmation of Frankfurt and the Bundestag as the sole financial centre of Europe, to the long-term loss of our country?

The Prime Minister: I would reply to that by saying that my position is direct at home and direct in Europe, and both are to the advantage of Britain.

Mr. Bellingham: To ask the Prime Minister if she will list her official engagements for Thursday 14 July.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Bellingham: In the course of her busy day, will my right hon. Friend plan a visit to west Norfolk? If she comes to west Norfolk she will be told that today's excellent unemployment figures are reflected locally. Since 1983 unemployment has fallen by half to 7·5 per cent., and since 1979 expenditure on the local health authority has increased by a staggering 60 per cent. in real terms. Is that not a classic case of wealth creation benefiting the whole community?

The Prime Minister: Yes. The record has been excellent. Since the last election unemployment has fallen by half a million. The increase in employment goes on apace. The increase in prosperity also proceeds apace, and it is due to the excellent policies pursued by my right hon. Friend the Chancellor of the Exchequer—policies which must continue into the future and which benefit the whole country.

Mr. Home Robertson: Has the Prime Minister read the report of the Scottish constitutional steering committee entitled, "A Claim of Right for Scotland"? Is she yet aware of the strain that her Administration are placing on the unity of the United Kingdom, and are there any circumstances in which she would be prepared to take account of our national status and the wishes of the people of Scotland?

The Prime Minister: Scotland has its own national status and always will. That has never been in doubt, since the very Union between Scotland and this country. I have not read the report, but I doubt very much whether either the hon. Gentleman or the Labour party wishes Scotland to separate from England.

Mr. Cran: To ask the Prime Minister if she will list her official engagements for Thursday 14 July.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Cran: Is my right hon. Friend aware that in the latest seven years for which statistics exist GDP grew in the


north of England at the rate of 90 per cent. per head of the population, which was above the British average, and that the figure for Yorkshire and Humberside was 89 per cent., which was the British average? Will my right hon. Friend take this opportunity to announce her intention to improve on that in the coming years, and to improve the prosperity of every region in the United Kingdom, which is undoubtedly the case at the minute?

The Prime Minister: The figures given by my hon. Friend are excellent, but then the record for the whole country is excellent as the new prosperity spreads over every region. My right hon. Friend the Chancellor of the Exchequer has provided a firm basis of prosperity that will continue and stretch long into the future.

Mr. Boyes: To ask the Prime Minister if she will list her official engagements for Thursday 14 July.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Boyes: Does not the proposed privatisation of the water industry make nonsense of the arguments used on the Conservative Benches that privatisation leads to greater competition among suppliers and greater choice for consumers? When the right hon. Lady turns on a tap in the morning, does she have a choice of supplier, and where is the competition?

The Prime Minister: Many water companies are already in private hands. There is nothing new about water being in private hands, as the hon. Gentleman would know if he knew history.

Mr. Conway: During the course of my right hon. Friend's busy day, will she reflect on the fact that home ownership has grown substantially during her premiership, and that that growth could not have occurred without her protection of mortgage interest rate relief? Will she assure the House that that relief will not be tampered with and that the Government do not intend to introduce a property tax of any kind?

The Prime Minister: I agree with my hon. Friend that we would not have seen the enormous extension of home ownership without mortgage interest tax relief. I am a great believer in it. As my hon. Friend knows, I get very cross if anybody wants to stop it, when they themselves got their foot on the first rung of the ladder by making use of that very relief. So long as I am here, it will continue.

Mr. Salmond: To ask the Prime Minister if she will list her official engagements for Thursday 14 July.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Salmond: Can the Prime Minister explain to the House why, if no decision has been made about the hot strip mill at Ravenscraig, Sir Robert Scholey should be publicly writing its obituary? Will she undertake to visit the Ravenscraig complex, to meet the shop stewards and a representative selection of Scottish opinion, and to hear at first hand why the closure and dismemberment of the Ravenscraig plant is not acceptable to the Scottish nation?

The Prime Minister: I answered an almost identical question last Tuesday, except that I was not asked to visit Ravenscraig. I doubt very much whether I can take up that kind invitation immediately. The position was made clear

by my right hon. and learned Friend the Minister of Trade and Industry when he answered a parliamentary question last December concerning the future of Ravenscraig, privatisation and the difficulty with hot strip mills, where there is at the moment a surplus of capacity. We do riot know what will be the position following the abolition of European steel quotas. When we do, we shall know precisely whether hot strip mill capacity will be in excess of demand and whether some mills may have to be closed.

Mr. Marlow: To ask the Prime Minister if she will list her official engagements for Thursday 14 July.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Marlow: May I ask my right hon. Friend what responsibility she has for British citizens overseas? I give as an example a pair of innocents abroad—a short, red-headed Welshman and his wilful wife—who, no doubt tanked up on South African wine, have offered to give £1,500 million of British taxpayers' money to their hosts each year.

Mr. Speaker: Order. I hope that the hon. Gentleman will relate his question to the Prime Minister.

Mr. Marlow: Is that something that we ought to ignore, or should we think about taking away their passports?

The Prime Minister: I thought that my hon. Friend started off his question by asking about overseas aid, but it was a little difficult to hear. Is that correct?

Mr. Marlow: indicated assent.

The Prime Minister: The overseas aid record of this Government is extremely good, not only in terms of direct aid, but in terms of the massive amount of investment that has gone overseas from the private sector. I agree that to increase it enormously, as has been proposed, would put a great deal of burden on our people. I also commend the excellent initiative taken by the Chancellor of the Exchequer to cancel some of the aid loans, which has now been taken up by the Toronto summit. I hope that my hon. Friend heard more of my reply than I did of his question.

Mr. Madden: To ask the Prime Minister if she will list her official engagements for Thursday 14 July.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Madden: Will the Prime Minister break the habit of a lifetime and give a straight answer to a straight question that has been put to her four times? Will the Government fund fully the pay award and the regrading exercise for our nurses? Does she understand that nurses in every constituency do not regard concern about their pay as troublemaking? They are much more concerned with Government treachery. That is what will be committed if the Prime Minister now says that the Government will not fund fully the pay award to the nursing professon.

Hon. Members: Yes or no?

The Prime Minister: The amount necessary to fund that award in full is £803 million. That was not calculated by the Government, it was calculated by the Nurses' Pay Review Body. It is intended to fund it in full—[HON. MEMBERS: "Yes or no?]—

Mr. Speaker: Order. We do not have the chanting of that sort of thing here.

The Prime Minister: Most nurses in the United Kingdom rejoice at the £803 million, compared with the cut, cut, cut that they had under Labour.

Cervical Cancer Screening (Christie Hospital)

Mr. Keith Bradley: (by private notice): To ask the Secretary of State for Social Services if he will make a statement on the errors found in the cervical screening tests performed at the laboratories at Christie hospital in Withington, Manchester.

The Parliamentary Under-Secretary of State for Health and Social Security (Mrs. Edwina Currie): The Christie hospital in Manchester processes some 250,000 cervical smears per year. I understand that it undertakes work for several health authorities, including North Staffordshire.
As a result of a routine check, some doubts were expressed about 60 slides that are now being checked by independent advisers from other regions. I understand that part of the problem relates to the process by which the slides were made, which has made them somewhat difficult to interpret.
I am satisfied that appropriate action has been taken promptly. All the slides were taken quite recently and all the clinicians concerned were notified at once. Where appropriate, repeat smears have been, or are being, taken.
We have complete confidence in the Christie, which has an international reputation in this area.

Mr. Bradley: I am grateful for the answer that the Minister—the junior Minister —has given.
I should like to praise the Christie hospital, which is based in my constituency of Withington, as it is a centre of excellence and I believe that it is one of the best-run laboratories in this country undertaking cervical screening. I have particular praise for Dr. Yule and his staff who have worked under tremendous pressure during the past few years when the financial resources to the South Manchester health authority have been extremely limited.
When the errors—as they have been called—which were identified came to light in north Staffordshire, why were Dr. Yule and his staff not informed of that fact? No discussion has taken place between the Christie laboratories and north Staffordshire about the differences that have been found.
The Labour party welcomes the extension of cervical screening—we have been pressing for that for a number of years—and the regular call and recall of women. It is absolutely essential that resources are made available to ensure that there is reliability and a high standard of staff within the laboratories such as the Christie laboratories. Such reliability should continue, not only in public laboratories such as Christie's, but in the private laboratories to ensure that proper procedures and reliability are maintained. Finally—[Interruption.]

Mr. Speaker: Order. This is a question, not a statement. I appeal to the hon. Member to be brief.

Mr. Bradley: Briefly, when will the Government recognise the pay and conditions of the laboratory staff and ensure that they are adequately funded, trained and maintained in the public sector of public health?

Mrs. Currie: As the hon. Gentleman may well know, since January this year, when a circular was sent out from my Department, all laboratories taking part in the cervical

cancer screening system are required to have external policy assessment systems. The standard practice is to do a quality check on one in 10 smears. At the Christie the staff routinely read one in seven. Therefore, their checking procedures, which are of the utmost vigour, set higher standards than are routinely required. The normal practice where there is a dispute between clinicians, as there is in this case, is to call in a third party, and that is precisely what we have done. We wait to see exactly what they will recommend to us, if anything.
The hon. Gentleman may well know that the MLSO training scheme has not until now included specific training for cervical cytology, but it is under consideration. We are keen to standardise both training and qualifications in this area. I am satisfied that it has not been a question of resources but of how the slides were prepared and whether there is any genuine dispute about the results that they might or might not show.

Mr. Churchill: Is my hon. Friend aware that her tribute to the excellence of the Christie hospital will be much appreciated by my constituents and people throughout the north-west of England? Will she confirm that the Christie hospital conducts more cervical screening than any other hospital or centre in the country? Is not the suggestion that the specific smears, which have been alluded to as being faulty, were apparently sub-standard, of concern? Was that due to human failure or the failure to provide the correct, most modern equipment for the smears to be taken? As the Christie hospital draws 95 per cent. or more of its patients from outside the South Manchester health authority area, will she seriously consider putting it on the same basis as the Royal Marsden in London, which is its own health district?

Mrs. Currie: It would probably be premature of me to comment on what went on, if anything, in the terms my hon. Friend suggests. The Christie does 250,000 smears a year out of a national total of 4 million. Therefore, it is a major part of our screening programme, as my hon. Friend said, although many of those smears come, not through the screening programme, but through work done on patients who have other conditions. I am sure that my hon. Friend would agree that the woman in danger is the woman who has never had a smear. It continues to be true in Manchester, as in the rest of the country, that the majority of deaths occur in woman who have never been tested.

Several Hon. Members: rose——

Mr. Speaker: Order. I appeal for brief questions.

Mr. Tony Favell: My hon. Friend announced that cross-checks have been taken in respect of women who have had smears in north Staffordshire. Can she confirm that cross-checks will be made on samples taken elsewhere, particularly in the north-west, including my constituency of Stockport?

Mrs. Currie: Yes, this is standard practice and we expect first-class internal and external quality control systems to be implemented. I have no information that that is not the case.

Mr. Tony Lloyd: Does the Minister accept that she is wrong when she tells the House that the woman in danger is the woman sho has not had a test? The woman who has had a wrongly diagnosed test is in considerable


danger. Can she satisfy the House that this cluster of samples which showed problems is a one-off and has no implications for any other district? As the Minister said, many district health authorities use the good facilities at Christie, but we want to ensure that if mistakes have been made in north Staffordshire, they have not been made anywhere else.

Mrs. Currie: Yes, I am satisfied that this is an unusual incident that deserves the full investigation that it is receiving. I repeat what I said earlier: the women who are in danger are those who have never been tested. Most deaths in this country from cervical cancer among our women are those of women who have never had a smear test. I notice that the lady Members in the House are nodding as I say that.

Mr. John Evans: In view of this morning's press report that the Christie has taken work from large numbers of other authorities, including St. Helens, will the Minister undertake to return to the House with a full statement once she has concluded her investigations? Obviously, a number of women up and down the counry must be worried.

Mrs. Currie: I am satisfied that it is entirely right that the outstanding work at the Christie, which is one of the world's greatest cancer hospitals, with first-class laboratories, should be available to a large number of health authorities. The hospital also acts as assessor for other authorities, which is entirely right and proper. I am satisfied that this batch of 60 slides, which comes from one part of the country and whose problems may be due to the way in which the slides were prepared and not so much to the way in which they were read, is being properly investigated and any cause for concern is being alleviated.

Mr. Eddie Loyden: The situation on Merseyside should again exercise the mind of the Minister. If such things happen they will obviously undermine women's confidence in the service, and the women the Minister mentioned who have not had a smear may not trust the system. Should she not be seriously concerned to ensure that there is no recurrence of this sort of thing?

Mrs. Currie: The hon. Gentleman will know of the efforts that my Department made to ensure that the problems in Liverpool were dealt with as promptly as possible once we had been alerted to them. We have learnt the lesson from Liverpool. In part, it was that there was no clear internal or external quality control system. In this case, quality control systems have picked up problems extremely quickly. All the smears that are the subject of dispute were taken within the past few weeks and all the clinicians concerned have been contacted.

Mr. Jerry Hayes: Sadly, cases of this sort will continue as long as we have cytological methods that are slow and up to 40 per cent. inaccurate, and which examine only normal looking cells. Will my hon. Friend do all that she possibly can to divert more resources into research relating to automation and accuracy?

Mrs. Currie: Yes, we are as interested as my hon. Friend in eventually getting some form of automation, especially as we are dealing with 4 million smears a year.

I was pleased to note at a recent scientific meeting in the Department that about 13 different proposals were presented to us, some of which looked promising. Getting it right is a slow business; for the time being we shall continue to rely on the excellent people who work in our laboratories.

Mr. Ken Eastham: I want to take up the point the Minister made about the women who have not had the test being at greatest risk. Is she satisfied that there is enough expenditure on promotions to encourage women to have the test? Will she assure the House that if there are greater financial needs at Christie hospital and similar hospitals she will ensure that the funding is available to expand the service?

Mrs. Currie: The work in Manchester in particular suggests that one of the key problems in getting people to respond is that the FPC registers are not always accurate. Sometimes that is because the names and addresses of the women concerned have changed and they have not notified their GPs. I met the Manchester family practitioners committee recently. It is taking vigorous steps to update its FPC registers, so we hope that some of the problems will diminish in future.

Ms. Harriet Harman: Will the Minister ensure that when there is a difference between two health districts about the accuracy of smears her Department is called in at an early stage to provide independent assessment? Does she accept the proposal of the Institute of Medical Laboratory Sciences that there should be annual proficiency checks for all cervical cancer screeners as part of a national quality control programme in our laboratories?
Although the Government have numerous procedures for measuring the cost of laboratory services, is it not true that they have no national procedures for monitoring their quality? Will she use national television advertising to give women the confidence to go for a smear test, and will she set up quality control to justify that confidence? Does she accept that there are more likely to be further doubts about the quality of the screening programme in view of the cuts and closures of family planning clinics and the collapsing morale of underpaid laboratory staff? [Interruption.]

Mr. Speaker: Order. This is a private notice question.

Mrs. Currie: In answer to the hon. Lady's first question —and I am sure that she would like to hear the answer —[Interruption.]

Mr. Speaker: Order. These are indeed very serious matters. Let us listen to the answers.

Mrs. Currie: In answer to the hon. Lady's first question, my Department does not itself provide independent assessment. What happens is that the departments that are in dispute are required to call in third party assessment, and that is what they have done from two different regions.
In answer to the second question, we are interested in annual checks on staff proficiency, and we are working together with the profession to see whether it can be introduced. In answer to the third point, that there are no national procedures, let me gently recommend the hon. Lady to go to the Library and read the circular that I issued in January this year. The reference number is


HC(88)1. She will find that the procedures are contained in it. [Interruption.] If the hon. Lady has not read it, I am not surprised that she does not know about it.
In answer to the question about television advertising, as 4 million smears are being taken every year it is probably now unnecessary to organise a campaign of that kind. In answer to the last two questions, I do not think there is any reason for doubts of the kind that the hon. Lady has expressed. Opposition Members have called for 20 years for the cervical cancer screening programme to be brought in. We have now done that, and I am satisfied that it will save many lives in future.

Business of the House

Mr. Frank Dobson: Will the Leader of the House state the business for next week?

The Lord President of the Council and Leader of the House of Commons (Mr. John Wakeham): The business for next week will be as follows:
MONDAY 18 JULY—Supplemental timetable motion on the Education Reform Bill.
Consideration of Lords amendments to the Education Reform Bill (1st Allotted Day).
TUESDAY 19 JULY—Consideration of Lords amendments to the Education Reform Bill (2nd Allotted Day).
Motions relating to the Housing Benefit, The Family Credit and the Income Support (General) No. 2 Amendment Regulations.
WEDNESDAY 20 JULY—Supplemental timetable motion on the Local Government Finance Bill.
Consideration of Lords amendments to the Local Government Finance Bill.
Motion on the code of recommended practice on local authority publicity.
THURSDAY 21 JULY—Estimates Day (3rd Allotted Day). There will be debates on hospital and community health and other services, England (class XIV, vote 1) and on the Training Commission (class VII, vote 5) so far as it relates to adult employment and youth training.
Motion on the British Shipbuilders Borrowing Powers (Increase of Limit) Order.
Motion on the Church of England (Pensions) Measure.
At Ten o'clock the Question will be put on all outstanding estimates.
FRIDAY 22 JULY—There will be a debate on the White paper "Reform of Section 2 of the Official Secrets Act 1911" (Cm. 408) on a motion for the Adjournment of the House.
MONDAY 25 JULY—Remaining stages of the Copyright, Designs and Patents Bill [Lords].
The House may be asked to consider any Lords amendments which may be received. The House will also wish to know that, subject to the progress of business, it will be proposed that the House should rise for the summer Adjournment on Friday 29 July until Wednesday 19 October.

Mr. Dobson: It is customary to thank the Leader of the House for his business statement, but I would be a hypocrite if I thanked him for what he has told us today.
Before I deal with the business set down for next week, may I ask the Leader of the House to tell us when we are likely to get the next statement on the Rover fiasco? The work force at least is entitled to find out as soon as possible what its future is to be.
From the proposed business for next week, it is clear that we have now reached the ridiculous stage where the Government's legislative business is being organised and master minded by the same people who are organising flight departures at Gatwick airport. It is proposed that on Monday and Tuesday we are to have guillotined debates on the Lords amendments to the Education Reform Bill. The Lords have made, in case the yobboes on the Government Benches have not noticed——

Mr. Speaker: Order. Moderation in language is the rule here.

Mr. Dobson: They are honourable yobboes.
The Lords have made more than 569 amendments to the Education Reform Bill. The amendments cover no fewer than 97 pages and a wide variety of important issues, including parents' ballots, academic freedom, the funding of universities, including those in Scotland, and, particularly, the vexed and delicate topic of religious education and religious services in schools.
The proposed time to be made available to debate all those issues works out at about 80 seconds per amendment —not enough time to read them out, let alone debate and consider them. The Government proclaimed tht the Education Reform Bill was a matter of the utmost importance, but the timetable proposed for next week shows that they intend to treat the Bill, the House of Commons and the nation's children with contempt. I remind Conservative Members that, if the Bill is as important to the future of our children's education as Ministers claim, there are no action replays of childhood. The House must get things right, but there is no chance of getting them right as things stand at present.
On Wednesday, we are expected to debate the Lords amendments to the poll tax Bill. The Lords have made at least 482 amendments—that was the latest count—to that flagship of the Government's legislative programme. The time proposed to be made available to debate the amendments is equivalent to about 60 seconds per amendment.
Both those Bills have been changed almost beyond recognition by the Lords, yet scarcely any time is provided for this elected House to scrutinise the Bills. I say to the Leader of the House, Ministers and Conservative Members that, if they do not make more time available to debate those measures, these will not be Acts of Parliament; they will be little more than ministerial directives, unconsidered by the elected part of this Parliament.
Will the Leader of the House reconsider his proposals? Will he give those people affected by the changes in the Lords the opportunity to advise hon. Members about what they think of the changes that have been made and then bring the Bills back and provide time to debate them properly? We hear a lot of cant from time to time about the need to sustain parliamentary democracy, and Conservative members should remember that, on all occasions, Opposition Members have sustained that position.
The biggest threat to parliamentary democracy is when Governments treat democracy with contempt. That is what we face now, and we call upon the Leader of the House to reconsider the proposals and come back with something sensible that can be sustained.

Mr. Wakeham: The hon. Member for Holborn and St. Pancras (Mr. Dobson) asked me first about the Rover company. I do not think that there is anything useful that I can say at the moment, but the Government certainly intend to keep the House informed in the appropriate way. We can discuss the matter through the usual channels.
The hon. Gentleman raised the question of the Education Reform Bill and, in particular, four issues that he said were extremely important. The amendments to the Bill are available in the Vote Office. I intend to table the

timetable motion later today. I believe that the time allocated for consideration of the Lords amendments will prove to be adequate. In view of what the hon. Gentleman has said, I am prepared to have the matter examined again through the usual channels.
I believe that a full day's debate on the Lords amendments to the Local Government Finance Bill will prove to be adequate. I listened to what the hon. Member for Holborn and St. Pancras said and I am prepared to examine the matter again through the usual channels.
Some of the more general remarks of the hon. Member were a bit rich. I reject his criticisms. We shall complete our consideration of the Finance Bill this evening, and I have announced the concluding stages of three major Bills and the proposal that we rise for the summer recess before the end of July. If the hon. Gentleman thinks that that points to disarray in the Government's business programme, he must be thankful that he was not here to see the legislative programme of the last Labour Government.

Mr. Patrick Cormack: To take up my right hon. Friend's welcome response to the hon. Member for Holborn and St. Pancras (Mr. Dobson), will he bear in mind that Conservative Members would like to debate the Education Reform Bill and the Local Government Finance Bill in some detail and with some seriousness? Will he consider devoting all of next week to the Education Reform Bill, leaving the Local Government Finance Bill until we return in October? Many of us would be perfectly happy to consider the Bills in August as well. I know that my right hon. Friend accepts that these are matters that deserve the most careful and earnest consideration. I hope, therefore, that he will think again.

Mr. Wakeham: I have said to the hon. Member for Holborn and St. Pancras that I shall consider these matters again. I have not yet given an undertaking that I can make any changes. I accept that there are a great many amendments to both Bills, but most of them are technical and drafting. A further significant number arise from concessions and commitments which were made during the Bill's passage.

Mr. James Wallace: Does the Leader of the House agree that much time could be saved in debating the Lords amendments to both the Education Reform Bill and the Local Government Finance Bill if the Government were prepared to accept many of the sensible amendments that were won in another place, not least those relating to academic freedom and exemption for student nurses, which were tabled and moved by my noble Friends? Can the right hon. Gentleman give any hope that these amendments will be accepted? Various concessions have led to some amendments to the Local Government Finance Bill. They do not make it a good Bill, but if they are accepted it will be less bad. What arrangements are being made to extend the concessions to Scottish legislation?

Mr. Wakeham: The substance of the Bill will have to await the debate. The Government have examined carefully all the issues raised in debate and have accepted a number of suggestions from Opposition parties and from their own supporters. We recognise that in some respects the Bills have been improved. We are grateful to all


concerned for their contributions. We are criticised, however, for making concessions when it comes to bringing legislation forward from another place.

Mr. Michael Fallon: Will my right hon. Friend confirm the rule that those who are paid under the Ministerial and Other Salaries Act should not normally absent themselves abroad while the House is sitting? Does he expect next week's business to be attended by the Leader of the Opposition? Does the accept that his safari is strictly necessary?

Mr. Wakeham: I have enough problems on my hands without worrying about the Leader of the Opposition.

Mr. Jeff Rooker: Is the Leader of the House aware that he does his reputation no good when he boasts that he has announced the final consideration of two Bills and that the Government are managing the business properly, when he could not do that if he had not announced that the Bills were to be guillotined in the first place?
We and the country understand that the Cabinet consists of Members of Parliament and Members of the other place, but it is clear from the right hon. Gentleman's statement that there is not one parliamentarian among them. Why does he seek to undermine Members of Parliament, which is the effect of his statement? We are expected to say to our constituents, "Obey the laws that have been passed in a freely elected Parliament," when those laws have not been discussed? I cannot say to my constituents, "You must obey this law because it was debated. We lost the vote but it was debated."
It is unacceptable that we should be asked to deal with 500 amendments in one day on the poll tax Bill. It does not matter that all bar two of the amendments were tabled by the Government. We are entitled to discuss Government amendments. We know that—[Interruption.]—every one of those Government amendments in the other place was requested in the House of Commons in Committee and on Report and we are entitled to a proper and full explanation of why the Government have now amended the Bill in the other place—a Bill that they said could not be amended in the other place because it was a taxation matter.

Mr. Wakeham: I recognise that the hon. Gentleman's comments are not entirely connected with the business for next week.

Mr. Rooker: Yes they are.

Mr. Wakeham: However, I appreciate that a great deal of business is set down for next week and I have said that I am ready to have discussions through the usual channels. But the hon. Gentleman will recall that on previous occasions the House has considered a large number of Lords amendments on a reasonable time scale. For example, in 1986, just over 580 Lords amendments to the Financial Services Bill were dealt with in just under eight hours.

Mr. John Wheeler: Does my right hon. Friend agree that, if the House is to have any regard to the statements made this afternoon by the hon. Members for Holborn and St. Pancras (Mr. Dobson) and for Birmingham, Perry Barr (Mr. Rooker), the absence of the well-paid Leader of Her Majesty's Opposition is an outrage? Will he make arrangements to bring him back

from looking at the one-party state of Zambia and the failed Marxist economy of Mozambique in order to participate in the importanit work of next week?

Mr. Wakeham: As I have said, I am not responsible for the Leader of the Opposition's travel arrangements. I have announced what I believe to be reasonable business for next week, and I have said that I shall look at it again in view of the request of the hon. Member for Holborn and St. Pancras. However, I must point out that, while both Bills came under a guillotine motion, passed by the House, both allowed a considerable amount of time for discussion.

Rev. Martin Smyth: Will the Leader of the House bear in mind that on several occasions we have asked when legislation would be brought forward to restore democracy in Northern Ireland and on several occasions he has told us that discussions are going on? In the light of the impending end of term and the pressure of next week's business, and the reported comments of the Prime Minister of the Irish Republic that it is impossible to maintain a proper and civilised relationship with the United Kingdom, may we have a statement in the near future on when Northern Ireland, as part of the United Kingdom, will obtain proper democracy?

Mr. Wakeham: I recognise the anxiety about that matter. However, any changes in that system would best be considered against the background of the wider progress of Northern Ireland affairs. I intend to invite the right hon. Member for Lagan Valley (Mr. Molyneaux) to see me for a chat about those matters before the House rises. I cannot promise early progress, but I should very much like to hear his views.

Mr. Dudley Smith: As my right hon. Friend has announced the dates for the summer recess, will he update us on the televising of Parliament? What progress is being made by the Committee that is considering the matter? Will its report be debated in the House? Without giving actual dates, can he give us some idea of when the experiment will start?

Mr. Wakeham: The Select Committee is making good progress and is working hard. I cannot give my hon. Friend any guidance on the date that its report will be published except to say that it will not be before the House rises for the summer. The House will have an opportunity to debate and make a decision on the report before the experiment is approved and takes place.

Mr. Peter Snape: May I press the Leader of the House further on the question of a debate on the future of Rover, particularly in view of yesterday's statement from the European Commission referring to the Rover Group's move from mass car production to specialist car production, a move that has never been debated in the House, which has enormous implications—even the buffoons on the Conservative Benches should listen to this—for the west midlands car components industry? Are those matters to be left solely to the decisions of Mr. Peter Sutherland and Lord Young, neither of whom is answerable to the House?

Mr. Wakeham: The hon. Gentleman, as a fair man, will recognise that we have had several debates on Rover and the substance of what was said in them is a matter not for me but for those taking part. I have said that I recognise


that this is an important matter. The Government wish to keep the House informed of any developments, and I shall arrange for that to be done through the usual channels. That is the best way to proceed.

Mr. Jonathan Aitken: If my right hon. Friend, as a result of his discussions through the usual channels on next week's crowded business, needs to find a little more parliamentary time, may I suggest that he considers postponing Friday's debate on the reform of the Official Secrets Act until the spill-over period? Is he aware that it seems a little over-secretive to be debating the reform of official secrecy in the dog watches of a July Friday when there is much interest in the matter which would benefit from further consideration of the recently published White Paper in prime parliamentary time?

Mr. Wakeham: Many of us find that we are in the House on Fridays and we are talking about a normal Friday. I recognise that for some people Friday is not the most convenient day, but I arranged the debate because the Government undertook to do so. Obviously, if there was a general wish to change it, I would consider that, but I believe that it is best to proceed as I announced.

Ms. Dawn Primarolo: Will the Leader of the House arrange for a statement to be made to the House on the current situation in Nicaragua—[Interruption.] Conservative Members may find this funny, but people are dying in Nicaragua and it is not a funny subject—particularly in the light of the actions of the Americans in the last few weeks, and bearing in mind that the American Senate is considering an amendment to reinstitute lethal aid to the Contra terrorists to institute violence, destabilisation and attacks on a young democracy. We as a democracy should be stating clearly our revulsion towards those activities and pressurising the Americans, through the House, to back off and leave Nicaragua alone.

Mr. Wakeham: I cannot promise the hon. Lady a debate on that subject next week, but there are ways in which she may be able to raise it. I have seen the early-day motion on the subject in her name, but I have to tell her that the Government deplore that motion, which seeks to justify actions by the Sandinista Government which are in clear contravention of their commitment to the democratisation embodied in the Guatemala peace agreement.

Mr. James Kilfedder: Last Monday evening, when the Foreign Secretary appeared on television on "Wogan", the Secretary of State for Northern Ireland also appeared on television when he said that, in effect, it was vital that he should stay on an extra year in that office in order to bring his political initiatives to a successful conclusion. The people of Northern Ireland are mystified because they are not aware of any political initiative that would require the Secretary of State to stay on for another year to bring it to a conclusion. Therefore, may we have an urgent debate next week so that the Secretary of State can reveal to the elected representatives of Northern Ireland and to its people, who have been treated like a second-rate colony, this mystical so-called political initiative? The democracy that is so essential for Northern Ireland's progress might then be restored.

Mr. Wakeham: I regret that I cannot find time for a debate on Northern Ireland next week. I also regret that I do not have time to watch the television programme, whose name I have forgotten, that the hon. Gentleman saw last week. However, I wonder whether he has paraphrased exactly what my right hon. Friend said. My right hon. Friend is an excellent Secretary of State for Northern Ireland, and the longer he stays the better. However, if my right hon. Friend thinks that he can complete the task of solving the problems of Northern Ireland in one year, he is more of an optimist than I suspect he really is.

Several Hon. Members: rose——

Mr. Speaker: Order. I appeal to hon. Members to ask questions about next week's business and not to make general comments.

Mr. Alex Salmond: Has the Leader of the House had an opportunity to study the "A Claim of Right for Scotland" document produced yesterday by the campaign for the Scottish Assembly? Do the Government intend to make a statement on that document and explain for how long they will continue to ignore the overwhelming majority opinion in Scotland in favour of constitutional change?

Mr. Wakeham: The hon. Gentleman makes claims for his authority to speak for opinion in Scotland which I do not recognise in election results. I have not studied the document that he referred to, but if he sends me a copy I will look at it.

Mr. Neil Hamilton: I hope that my right hon. Friend will join me in deploring some of the mischief-making by Conservative Members about the absence of the Leader of the Opposition while he is visiting black dictators in South Africa when he should be in the House.

Mr. Speaker: Order. The hon. Member should ask about the business for next week.

Mr. Hamilton: Would it be in order for my right hon. Friend to authorise a debate next week on the value to this country of the Leader of the Opposition being abroad as often as possible, because confidence in Britain will inevitably grow the more he demonstrates to foreigners why the Labour party is unelectable?

Mr. Wakeham: I am quite sure that I could get such a motion in order, but I have no intention of trying.

Several Hon. Members: rose ——

Mr. Speaker: Order. I repeat that business questions are supposed to be about business next week, not about scoring political points.

Mr. David Winnick: As it is Nelson Mandela's 70th birthday on Monday—Opposition Members honour his memory and would wish for a Government statement on the subject—is the Leader of the House aware that we are especially pleased that the Leader of the Opposition has been in southern Africa and making the sort of remarks about the criminal apartheid regime that the Government refuse to make? My right hon. Friend has been representing the majority British point of view about what is happening in South Africa.

Mr. Wakeham: I have nothing further to add. If the right hon. Gentleman has to explain himself to his colleagues, that is up to him.

Mr. Richard Holt: Will my right hon. Friend reconsider my request last week for an urgent debate on the Cleveland child sex abuse case? He courteously wrote to me and said that that was not possible, but since then Dr. Higgs has repeated her assertion that all her diagnoses were correct and Michael Bishop has repeated his assertion that his department was right to take children away from their parents when they were manifestly not sexually abused. One has only to read the judgment of both Judge Myrella Cohen and Lord Justice Butler-Sloss to come to that conclusion. It would be a manifest injustice to people in my constituency and the area if the House were to rise for the summer recess before we had a debate on this subject.

Mr. Wakeham: I recognise that this is an important subject and how strongly my hon. Friend and his constituents feel about it. I cannot promise him Government time, but there are ways in which he could raise the matter in the House before the summer recess. I invite him to do that.

Ms. Hilary Armstrong: Is the Leader of the House aware that the amendments to the Education Reform Bill constitute a document that is larger than the Education Act 1944? Does he believe that it is reasonable and fair, or that it has anything to do with improving the education opportunities of all our children, to consider such a lengthy document with so many amendments in two days? Will he give a commitment that we will have more time to debate this issue, which is vital for the nation and its children?

Mr. Wakeham: I recognise that this is an important measure and also that it is substantially longer than the 1944 Act. A substantial number of the amendments are technical and constitute concessions, and I believe that the time that I have allocated is adequate and will prove to be so. I have said that I will consider the matter again, but I do not think. I can add anything further.

Mr. Michael Latham: Will my right hon. Friend talk today to the Lord Chancellor and Lord Denham with a view to some action—not a statement—next week to prevent the very large number of our constituents who visit the Houses of Parliament having to queue in the rain before they come in? If we can put up an awning for the State opening of Parliament, we can put one up for the people who want to visit their Parliament day after day.

Mr. Wakeham: That matter has been looked at in the past and, of course, can be looked at again, but with all the powers I have, I do not think I could organise that for next week.

Mr. James Lamond: Will the Leader of the House give permission to the Prime Minister to tell us next week about the angry exchanges that she no doubt had with the President of Turkey about the lack of human rights and the lack of respect for the Helsinki Final Act in Turkey, and the angry demands which she no doubt made for the removal of his troops of

occupation from the northern part of Cyprus? They have been occupying part of a fellow Commonwealth country since 1974.

Mr. Wakeham: I can only repeat what I said last week. Turkey is a dependable ally with which we enjoy a close relationship, and President Evren is a welcome guest here.

Mr. Eric Forth (Mid-Worcestershire): Will my right hon. Friend arrange an urgent debate on the role of the Leader of the Opposition, especially with reference to the tradition of the House—which seems now to be cast aside—that senior politicians, such as the Leader of the Opposition, do not criticise the Government when abroad? Will my right hon. Friend also arrange for a debate on the encouragement of South African exports by the Leader of the Opposition in drinking South African wine? Also, will he arrange for a debate on the role of the Leader of the Opposition in by-elections? Perhaps he could suggest that the right hon. Gentleman should at least be in this country during by-elections.

Mr. Wakeham: As I have said to several of my hon. Friends, I have no responsibility—for which I am greatly relieved—for what the Leader of the Opposition decides to do or not to do. I have outlined some very important business for the House to deal with next week, and that will be the most profitable way for the House to spend its time. I have enough difficulties dealing with that business.

Mr. Nicholas Brown: The Leader of the House will no doubt be aware that, last Wednesday, the Public Accounts Committee published its 31st report on "Naval Warship and Weapons Procurement". I should like him to arrange a debate on that important report next week, but if he cannot do so will he draw the following controversial point to the Prime Minister's attention? The Ministry of Defence told the Public Accounts Committee that
they sought to avoid getting into a situation where one contractor won all the business in warship procurement, which might give short-term but not long-term value for money.
That is what the Ministry of Defence told the Public Accounts Committee, yet the Leader of the House will recall that last Monday the junior Minister for Defence Procurement came to the Dispatch Box and announced that the whole frigate programme was being placed with one yard. That was precisely the opposite of what the PAC had been told. The House is entitled to know whether the MOD has changed its mind or whether the PAC has been substantially misled.

Mr. Wakeham: A third explanation is that the hon. Gentleman has got it a bit muddled. The Government respond to reports from the PAC at the proper time, when they have given them proper consideration, and that is what they will do on this occasion. I am not prepared to arrange a debate in advance of a response from the Government to the PAC's report.

Sir John Stokes: Is my right hon. Friend aware that British Telecom is still giving franchises to allow the transmission of pornographic material on the telephones? Will he arrange for the Home Secretary to come to the House next week and put a stop to that vile practice which is corrupting our youth?

Mr. Wakeham: I do not know that I can get my right hon. Friend the Home Secretary to come to the House to make a statement, but I am sure that those responsible for such matters and those responsible when there are any breaches of the law will have heard what my hon. Friend said and will take the appropriate action.

Mr. Allen McKay: May I revert to the answer that the right hon. Gentleman gave my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker), calling in aid the Financial Services Bill? That was not subject to a guillotine, whereas the Bill that we are to debate on Wednesday will be subject to a guillotine. When there is a guillotine on a Bill with 500 amendments time is needed to discuss it properly. While some of the amendments are technical, other amendments from the Lords concern matters which have not been discussed either in Committee or on Report in this House and there is need for time to do that. Does he realise that, although announcing the rising of the House on 29 July and the return on 19 October, he seems to be rushing a Bill which will affect every person and every family in this country, and that the country will not forgive a Government who rush through such a Bill or an Opposition that allow them to do so?

Mr. Wakeham: I did not pretend that I was quoting an exact parallel. I recognise that there is a difference between a Bill under a guillotine and a Bill not under a guillotine. But the House dealt with 580 amendments to the Financial Services Bill, which shows that inherently the number of amendments is not the only factor to take into account. The Education Reform Bill has already had more than 200 hours of discussion in the House of Commons and some 150 hours in the House of Lords. I believe that the time that I have allocated is adequate, but, as I have said, I am prepared to have discussions through the usual channels.

Mr. Andrew McKay: As I gather that next week the Leader of the Opposition will he coming back from his safari, would it not be a placatory end-of-term gesture for my right hon. Friend to change the business next week and arrange for a debate on one-party states in southern Africa to give the Leader of the Opposition an opportunity to speak on something of which he has first-hand experience?

Mr. Wakeham: My hon. Friend tempts me, but I shall not fall for the temptation.

Mr. Harry Ewing: Is there anything in the Education Reform Bill next week which will ensure that in future the Conservative party will be able to recruit much better qualified Back Benchers, rather than the bunch that we have had today asking illiterate questions based on an illiterate document and brief issued by Bernard Ingham? Surely for £22,500 their constituents are entitled to expect a much higher standard than primary 5 or 6.

Mr. Wakeham: The hon. Gentleman usually makes a better fist of it than that; he is usually a good performer on these occasions. I did not notice him here at 3 o'clock this morning to discuss the motion on short speeches, so that is not the excuse. I think that he must have welcomed my suggestion of a holiday beginning at the end of July.

Mr. John Carlisle: Will my right hon. Friend arrange an early debate on manners, conventions

and the behaviour of Members of this place outside the Chamber? Is he not particularly disturbed at the denigration of this country by the Leader of the Opposition during his recent visit to Africa and his very unpatriotic remarks about the conventions of this House? Is not my right hon. Friend also disturbed by the fact that today some 40 Labour Members left the Kensington by-election to visit my constituency, without letting me know, on a fruitless exercise to celebrate the terrorist Nelson Mandela's birthday?

Mr. Wakeham: I have some sympathy with my hon. Friend, but conventions and good manners are primarily a matter of self-discipline. Right hon. and hon. Members must decide how they feel they should behave, and conduct themselves accordingly.

Mr. Andrew Faulds: Hopefully, Sir, business for next week. As the West German courts have found that there was no Libyan involvement whatsoever in the bombing of the Berlin disco, and as the Prime Minister listened to and acted on the lying misrepresentations of General Vernon Walters about the involvement of Libya and allowed British bases to be used outside NATO arrangements for the bombing of Tripoli, when can the House have an opportunity to debate the necessary compensation that should be paid both to the Libyan Government and to the Libyan people?

Mr. Wakeham: I do not accept all the points in the hon. Gentleman's question, but it is not for me to comment in detail on what he said. I will see that the matter which he raises is referred to my right hon. Friend.

Mr. Tony Marlow: As one who spends more time than some other hon. Members in this House, and as one who is used, particularly in important debates, to the sea-green purity, the ininterrupted purity, of those on the Opposition Benches, particularly in debates on education reform and the community charge, may I say how pleased I and, I am sure, many of my colleagues would be to stay here for the first week of August, or even the whole of August, to get that important, vital, popular and progressive business through the House? Will my right hon. Friend, when he is having discussions through the usual channels, ask the hon. Gentleman the shadow Leader of the House how many of his hon. Friends would actually be here in August to debate this business, because I think that when he gets the answer to that question he will find out the true meaning of the word "cant"?

Mr. Wakeham: My hon. Friend is far too modest. I know from my time as Patronage Secretary, and my right hon. Friend the Patronage Secretary knows, that there are no limits to the support that my hon. Friend will give the Government on all occasions. If we asked him to stay for the whole of August and September, I know that he would do so very willingly, and I am very grateful to him for his support.

Ms. Joyce Quin: Is the Leader of the House aware of the proposed closure of Marconi Radar in my constituency and the decision by Marconi to concentrate production in the south-east? Does he not agree that this decision, which has caused dismay on


Tyneside, raises important regional and management considerations which should be given early examination by the House?

Mr. Wakeham: I recognise the hon. Lady's concern. I know that any closures are distressing to the people concerned, but some of them are inevitable and cannot be avoided. I recognise that this raises important issues. I have a lot of Marconi workers in my own constituency, and very high-quality, skilled workers they are, but I cannot promise an early debate on the subject.

Mr. Edward Leigh: Will my right hon. Friend resist demands for extra time to be given for the Local Government Finance Bill on the ground that, contrary to what we have heard today, given the number of concessions and the way in which the Government have won virtually every vote in the other place, there are only one or two matters of substantial difference between the two Houses? One night will be quite sufficient for the hon. Member for Birmingham, Perry Barr (Mr. Rooker) to make his reputation in the Labour party by explaining what Labour party policy is. How many seconds were available to discuss each amendment on the various Bills when the last Labour Government introduced four—or was it five?—guillotine motions in one day?

Mr. Wakeham: It was five guillotine motions in one day, but that was not something for which I had any responsibility. My hon. Friend makes a very fair point. The Local Government Finance Bill had two days' debate in this House on Second Reading. 147 hours in Committee and five days on Report and Third Reading. It has had one day in the Lords on Second Reading, over 54 hours in Committee, 24 hours on Report and one day on Third Reading. The matters that are outstanding are important, but, I believe, relatively simple for the House to resolve.

Mr. Ron Brown: Should there not be a special debate next week on the role of the Tory media, remembering the slogan, "Make it simple, make it short and make it up"? I say that specifically about a rape case involving a young person who had her name mentioned in The Sun, causing great distress to her family. Is it not time that there were controls? Government Ministers speak about decency and good manners. Is it not time that we saw decency and good manners in the British media, particularly in the so-called popular press?

Mr. Wakeham: I recognise when an injustice is done to somebody in the newspapers, but I have no comment to make on an individual case. There are ways of seeking redress, and I do not believe that a debate next week would be the way forward, although I recognise that this is an important matter.

Mr. Spencer Batiste: When my right hon. Friend is discussing through the usual channels the timetable for the Education Reform Bill, will he bear in mind that all the contentious issues raised today by the Opposition were fully explored in Committee and on the Floor of the House and that the concessions made arising from those discussions were widely welcomed on both sides of the House and outside? Will he also bear in mind that there are relatively few points of contention remaining between this House and the House of Lords and that, above all, those in schools, universities and polytechnics

who are responsible for implementing the provisions of the Bill require certainty as soon as possible so that they can undertake the necessary planning?

Mr. Wakeham: Absolutely. My hon. Friend puts his points extremely clearly. I am sure that everybody accepts the validity of his argument.

Mr. Dennis Turner: One of the great scandals in our midst is that of mass unemployment. From today's figures we can see that there are still large parts of the country with high unemployment. Wolverhampton is today marked as the black spot for unemployment in the west midlands. Lying behind those statistics is the human tragedy of people languishing on the dole when they want to make a contribution to society. I want to ask the Leader of the House if he will advise his Government that they should not be euphoric——

Mr. Speaker: Order. The hon. Gentleman should ask for a debate.

Mr. Turner: I am asking the Leader of the House a question. Will he make a statement of hope to all those people whom I have mentioned? Will he, before the summer recess, give them some hope that the Government will provide an opportunity for them to find a job and security at an early date?

Mr. Wakeham: I know that the hon. Gentleman speaks for his constituents, and that is perfectly right. He must recognise that, although unemployment is a tragedy for anyone, the Government have to continue with the policies they believe will bring unemployment down, as it has been coming down month after month for many months now. A welcome from him for what has been achieved over the past two years or so in falling unemployment would be appreciated, particularly as one of the areas in which unemployment is falling fastest is the west midlands.

Mr. Michael Brown: Will my right hon. Friend ask the Foreign Secretary to make a statement to the House about British-Zimbabwean relationships because a gross insult was paid to the Leader of the Opposition when he landed in Zimbabwe yesterday? There was no VIP to meet him and he was treated in a disgraceful way because he was not regarded as a very important person. Also, the Zimbabwean press has treated a senior Member of the House in a disgraceful way. He was not even recognised because journalists were asking, "Which one is Kinnock?"

Mr. Wakeham: That matter has been raised with me once or twice before. If I provided time for all the debates for which hon. Members are asking, it would not be a question of our rising on 29 July but we would hardly rise in time to come back on 19 October.

Mr. Doug Henderson: The Leader of the House will be aware of the publication by British Rail this morning of possible options on rail links with the Channel tunnel. He will be aware that many people believe the report to be unambitious and inappropriate. Will he arrange for a statement on rail transport to be made next week?

Mr. Wakeham: The Government welcome the publication of the report, which gives British Rail's most recent analysis of the capacity of the existing network and


the options for improving speed and capacity between London and the tunnel if, as seems likely, it becomes necessary at some time in the future. I agree with the hon. Gentleman that much more work needs to be done before British Rail is ready to offer firm conclusions and recommendations. It is for British Rail to pursue its studies in consultation with local authorities and other interested parties in the affected areas.

Mrs. Alice Mahon: Will the Leader of the House reconsider his reply to my hon. Friend the Member for Bristol, South (Ms. Primarolo) and arrange an urgent debate on Nicaragua next week? Will he accept that people who have been there perhaps know a little more about what is going on? Will he further accept that after a recent conversation with the Under-Secretary of State for Foreign and Commonwealth Affairs, who came out with what I would consider to be non-factual information about the country, perhaps there is an urgent need for the House to have a debate, not least to educate some Conservative Members in what is happening there? That country, which is smaller than England and has a population of fewer than 3 million, is fighting a war against the most powerful nation on earth. Congress at this moment is being asked to reconsider funding lethal aid to a hostile army of 9 million. It is an urgent matter, and I urge the Leader of the House to reconsider his remarks.

Mr. Wakeham: I told the hon. Member for Bristol, South (Ms. Primarolo) that I cannot find time for a debate next week. I have to stick to that view.

Mr. Peter L. Pike: May I make a helpful suggestion to the Leader of the House for when he returns to the usual channels to discuss next week's business? Would it not help if he were to propose that Monday, Tuesday and Wednesday should be spent on the Education Reform Bill, that the poll tax Bill should have three days' debate when we return in October and that the Housing Bill, which is in a shambles, should be dropped and we should have a new Bill in the next Session that really deals with the housing problems facing Britain? If the right hon. Gentleman has confidence in the legislative programme of the Government and believes in democracy, I am sure that he will recognise and be confident of the fact that the issues will be properly debated in the House.

Mr. Wakeham: I have confidence not only in the Government's legislative programme but in the fact that the House will approve it. I recognise that the hon. Gentleman made his suggestions in a spirit of helpfulness to the Government, but I regret that I must reject them.

Mr. William O'Brien: The reply given by the Leader of the House to my hon. Friends the Members for Birmingham, Perry Barr (Mr. Rooker) and for Barnsley, West and Penistone (Mr. McKay) is not good enough when we are talking about the poll tax. The Leader of the House accepted that the examples given in the reply to my hon. Friend the Member for Perry Barr were not identical. Therefore, there is room for the Leader of the House to reconsider the time allowed—I am not talking about minutes—to discuss the massive number of amendments from the House of Lords.
The reference to the hours that have been spent on the Bill in the House has no significance when we consider that

500 amendments have been submitted for consideration by the other place. In all fairness to the House and the people outside, there should be sufficient time—not minutes, but days—to discuss the poll tax Bill amendments so that we can ensure that there is a full and honest debate on that important issue. May we have an assurance that there will be sufficient time, not seconds, to discuss that important Bill?

Mr. Wakeham: I should not have proposed what I have unless I thought that it allowed sufficient time. I stand by that view. It is no good me pretending that one can look back to a past Bill and draw a correct and complete analogy. I have to justify the time for this Bill and the Lords amendments. I believe that the time I have proposed is adequate. It will be for the House to decide, but I have told the hon. Gentleman's hon. Friends that there will be discussions through the usual channels. I do not believe that I can be more reasonable than that.

Mr. Harry Barnes: Given the answer to my hon. Friend the Member for Normanton (Mr. O'Brien), which makes it look as if there will not be an extension of the debate on the poll tax, and given the fact that the Bill will be in operation in Scotland, may we have a debate to discuss the serious constitutional and democratic crisis that has arisen as a result of the production of that legislation, which will cut the franchise, destroy civil liberties and bring about the end of local government as we have known it in the past? We should have a debate that covers the wide range of constitutional problems facing us now.

Mr. Wakeham: That sounds like a repeat of a speech which the hon. Gentleman may have made in the many hours during which we discussed the legislation, or perhaps a trailer for the speech which he hopes to make in the debate on the Lords amendments, if he is called. I do not believe that it requires any comment from me during business questions.

Mr. Bob Cryer: On Friday 22 July the White Paper on official secrets is to be discussed. Will the Attorney-General respond to the debate? After all, he has spent over £1 million of taxpayers' money trying to suppress "Spycatcher". If he is in the House to answer the debate, as one hopes, we will be able to raise the issue of why he has allowed Tory sympathisers in MI5 to organise a seditious conspiracy against the 1974 Labour Government on evidence provided and never refuted by any member of the Government. Yet there has been no prosecution. Not even a little finger has been lifted by the Attorney-General to seek out the malefactors. Instead, he has thrown away £1 million of taxpayers' money on trying to suppress the truth.

Mr. Wakeham: It is not normal, in announcing the business, to announce who the speakers will be in any debate, but I should be surprised if the Attorney-General were to take part in the debate, which is in essence a Home Office matter. I should have thought that it was appropriate for the Home Secretary to take part. If the hon. Gentleman hopes to be called in the debate, may I suggest that he does a little homework before he comes to the House? He should recognise that the White Paper is about the reform of criminal law and that the matter to which he has referred was dealt with under the civil law.

Mr. David Clelland: In all seriousness, will the Leader of the House reconsider the answer that he gave a few moments ago to my hon. Friend the Member for Gateshead, East (Ms. Quin)? Will he arrange for an early statement on what the Government intend to do to prevent the closure of Marconi in Gateshead, with the loss of 450 jobs? Will he repudiate the answer given by the Minister of Trade and Industry yesterday, who implied that this was not a matter for the Government? Given the fact that not only will social and economic issues face the locality, but that there will be a loss of Government revenue and an increase in Government expenditure consequent on the closure, will the right hon. Gentleman arrange for a statement to be made? Will he reject the view that this is not a matter for the Government? If it is the view of Ministers that the closure is not a matter for the Government, is it not time that that view was changed?

Mr. Wakeham: Individual decisions by management as to how it organises itself are not a matter for the Government, and I see no case for the Government making a statement on the matter. That does not mean that we are not concerned about individual cases of unemployment. We will seek to do what can be done. The whole thrust of the Government's economic policy has been to produce lasting and worthwhile jobs. Surely the announcement of the unemployment figures today is adequate confirmation that that policy is working.

Mr. Max Madden: May I raise two matters with the Leader of the House? First, I hope that he remembers that recently on business questions I raised with him the difficulties that would arise for local authorities, including Bradford, if they were forced to make refunds to water authorities of sewerage charges. Will he ask officials in the Department of the Environment to write to me suggesting how I can raise the matter in the avalanche of amendments to the Local Government Finance Bill, so that I may have some warning as to when I need to be in the Chamber?
Secondly, may I draw the attention of the Leader of the House to early-day motion 1246, which is an attempt to secure a debate on the substantial increase in visa fees, which means that children are being charged £60 each to join their families in this country?
[That the Consular Fees (Amendment) Order 1988 (S.I., 1988, No. 925), dated 25th May 1988, be revoked.]
Will the Leader of the House arrange a debate before 29 July so that Government Ministers can seek to justify why they are erecting financial obstacles to families being united in this country?

Mr. Wakeham: I do not know what I can do to help the hon. Gentleman on the first point.

Mr. Madden: Just try.

Mr. Wakeham: Absolutely; I will try. If we can indicate to the hon. Gentleman in any way when he should be in the Chamber to make his contribution to the debate, without having to sit around, we will do so. I shall ask the Minister who is on duty to do his best for the hon. Gentleman, but I cannot guarantee 100 per cent. success.
The other matter is one for discussion through the usual channels.

Mr. Dennis Skinner: Why does the Leader of the House not stop trying to flannel hon. Members about

the guillotine next week on the poll tax legislation? Why does he refer constantly to the fact that he will have discussions through the usual channels, when he knows full well that he has no intention of changing his mind? He is just waiting for the end of questions on the business statement so that he can heave a sigh of relief and say, "I have got away with all that." The truth is that the poll tax guillotine is set against a background of hostile opposition, not only from everyone on the Opposition Benches, but from 37 Tory Members who were against certain aspects of it and in the House of Lords they had to bring in the greatest number of peers—some from as far away as Canada—since the introduction of the Common Market legislation. If the Government had any ring of democracy about them, they would put that legislation on one side. As for the taunts about turning up in August, some of us would come here long before the grouse season begins to fight against the poll tax legislation.

Mr. Wakeham: It sounds to me as though the grouse season has already begun. I do not know what the hon. Gentleman is asking me to do. Is he asking me not to have discussions through the usual channels? I have indicated what I propose to do. Whether the hon. Gentleman likes it or not, I shall do as I have said. I remind the hon. Gentleman that the Local Government Finance Bill has had a substantial amount of discussion, both in this-House and in the Lords, and that I moved a timetable motion early on to make sure that it had proper discussion.

Mr. Tam Dalyell: May I thank the Leader of the House for his courteous response at 3 am this morning on the subject, among other matters, of the appointment of the European Commissioner? From his study of early-day motion 228 and the 10 other early-day motions, which Mr. Speaker has asked me not to mention by number so that they do not have to be printed in Hansard, does he not think it proper that the announcement of the appointment of the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) as a European Commissioner should be made in the House of Commons, so that hon. Members can ask questions about whether it is proper to appoint one of our colleagues who supposedly—repeat, supposedly—for 14 days deceived not only his senior Cabinet colleagues but his senior civil servants and his Prime Minister?
If the right hon. and learned Member for Richmond, Yorks really did that in January 1986 and really deserved to be ousted from his position by, among others, the then Chief Whip—the Leader of the House will remember that in a previous incarnation he was Chief Whip—who, if we believe the hon. Member for Aldershot (Mr. Critchley) in his book "Heseltine", told him that he could not stay, is it proper that the right hon. and learned Member should be appointed this country's European Commissioner without at least a debate next week in the House?

[That this House notes in the book, Campaign, by Rodney Tyler, the Selling of the Prime Minister: from behind the doors of Downing Street and Conservative Central Office—A unique inside account of the Battle for Power that the author on page 1, chapter 1, paragraph 1, sentence 1, states 'It was an extraordinary turnaround in fortunes from the moment on 27th January 1986 when Mrs. Thatcher secretly confided to a close associate that she might have to resign…' and on page 3 that 'On the eve of the crucial Westland debate she herself felt shaky enough


to doubt her future, though some around her later sought to dismiss this as late evening anxieties of the sort that had disappeared the following morning. It is certainly true that if Leon Brittan had chosen to, he could have brought her to the brink of downfall, by naming the real culprits inside Number 10. Instead, he chose to remain silent', and calls on the Prime Minister to give a full account of what transpired between 3rd January and 27th January 1986, at Number 10 Downing Street, in relation to the selectively leaked Law Officer's letter concerning the Westland Affair.]

Mr. Wakeham: In order to comply with Mr. Speaker's request I will not mention the early-day motions that the hon. Gentleman has tabled. The hon. Gentleman must have been a little near to sleep at 3 am this morning if he thought that my response to the debate mentioned my right hon. and learned Friend the Member for Richmond, Yorks. (Mr. Brittan) in any shape or form. I did not mention him. The hon. Gentleman has a wild and fervent imagination. I am amazed at some of the things that he says in the House.

Mr. Harry Ewing: On a point of order, Mr. Speaker. I apologise for raising a point of order, but during my question to the Leader of the House I referred to Government Members asking illiterate questions based on an illiterate document issued by Bernard Ingham. In my question I compared Government Members to five and six-year-olds. On reflection, that is an insult to our five and six-year-olds. I unreservedly withdraw any aspersion that I cast on five and six-year-olds.

Mr. Speaker: I think that we should get on with the Finance Bill.

STATUTORY INSTRUMENTS, &c.

Ordered,
That the draft Pesticides (Maximum Residue Levels in Food) Regulations 1988 be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Kenneth Carlisle.]

KP Foods

Mrs. Alice Mahon: On a point of order, Mr. Speaker. In the past you have very kindly helped me when I have tried to raise the issue of the closure of the KP Foods factory in my constituency. I wonder whether you can help me further. I have since discovered that 550 of the workers who will lose their jobs in that factory will not show up in the Government's unemployment statistics. Perhaps you can guide me to the Department and the set of statistics in which I will find those 550 workers listed.

Mr. Speaker: The hon. Lady knows that it is not my role or function to give tactical advice. I am sure that there are others better qualified than me to do that.

Orders of the Day — Finance (No. 2) Bill

Order for Third reading read.

The Chief Secretary to the Treasury (Mr. John Major): I beg to move, That the Bill be now read the Third time.
The Bill gives effect to the most far-reaching reforms of the personal tax system that we have witnessed in this country in a single Budget. Whatever else may divide us—we have discovered during the passage of the Bill that the Government and the Opposition are divided on some aspects of the Budget—we are united in recognising the significance of the reforms set out in the Bill.
Through all our debates, in Committee and on the Floor of the House, two facts have shone through with increasing clarity. The first is that the Government have a coherent and successful strategy for taxation, and the second is that the Opposition do not. Those facts not only divide the Government and Opposition; they are one of the main reasons that explain why we remain the Government and they remain the Opposition.
One notable feature of our debates has been the lengths to which the Opposition have often seemed to want to go to avoid debating taxation. They have been very reluctant to commit themselves to any specific proposals. Yesterday they tried, and failed, to have a rerun of the public expenditure debates that we all enjoyed last February.
It is no surprise that the Opposition want to avoid debating tax at all costs. They know, as we know and as the country knows, that the 1988 Budget of my right hon. Friend the Chancellor was a landmark. It marked the final and decisive move away from a tax regime based on envy to a tax regime designed to promote enterprise and efficiency and thus to enhance prosperity. The measures contained in this Finance Bill are not a one-off; they are the logical consequence of a series of measures introduced in nine successive Budgets and enacted in successive Finance Bills with one clear aim in mind—not, as the hon. Member for Wrexham (Dr. Marek) would have it, to line the pockets of the "super-rich", but to improve the supply performance of the economy.
It is self-evident that that is working. Our macroeconomic policies, designed to keep downward pressure on inflation and create the right framework for growth in the private sector, have been focused on improving incentives and creating a culture that encourages risk-taking and makes investment worth while. The investment boom, the like of which we have not seen for a considerable number of years, is not unrelated to the change in cultural attitudes that my right hon. Friend the Chancellor and his predecessors have brought about.
Opposition Members have either never understood that change or have never wished to understand it; it is not clear which. As far as one can see, they remain wedded to the orthodoxy of the 1960s—that the only purpose of cutting tax rates is to give a sluggish economy a short-term fiscal boost. That is stone age economics, and they ought to know better by now.

Mr. Gordon Brown: Will the Chief Secretary confirm a figure that the Treasury has produced? Will he confirm that of the 1·8 billion that has gone in tax


relief to the top 1 per cent., £0.7 billion—£700 million— has gone in tax relief on unearned income? That £700 million could have prevented cuts in housing benefit, the freezing of child benefit and the creation of the social fund. Will the right hon. Gentleman tell us how giving £700 million in tax relief on unearned income to the top 1 per cent., who already earn on average £75,000 a year, boosts incentives to work?

Mr. Major: The hon. Gentleman is talking about investment income, which provides jobs and the economic growth that funds so many of the social services, which the hon. Gentleman claims to care about. I propose to deal with that point directly later and we shall then examine the reality of the tax changes.
It is important to understand the distinction that I mentioned a moment ago. The measures on the Finance Bill—contrary to what the Opposition have said—do not add to demand. Although tax rates have been cut, the tax burden itself has not—as Opposition Members occasionally point out to us during Treasury Question Time. The measures were enough to prevent the tax burden rising, but no more. The Budget and the Bill improve incentives and hence improve supply side performance.
In the long run, that means more growth, more jobs and more prosperity. In their obsession with the short run, the Opposition never seem to think of the medium and long term, yet all of us should have our minds fixed firmly on the medium and long-term outcome. The Opposition have no answer to the fact that our supply side measures are working. That is why they have conjured up false dragons to slay. Ludicrously, they appoint themselves the guardians of fiscal rectitude—unlikely casting to the mind of anyone who remembers the Labour party in government—and they tell us that the Budget is irresponsible.
It is hard to take lectures on fiscal rectitude from a party which. 13 months ago, fought an election with plans to spend an extra £35 billion in its back pocket—a party that planned not a public sector debt repayment of £3 billion but a massively inflated borrowing requirement. [Laughter.] Opposition Members may giggle like schoolgirls on an outing, but they have no proper economic policy, no tax policy and no understanding of what is going on. Until they change all that, they will remain what they are now—an Opposition with no policy and no hope.

Mr. Rhodri Morgan: How can the Chief Secretary equate the claim that the Government have not increased the tax burden overall with the proposition that the redistribution of the tax burden by the Budget does not contribute to demand? Surely, by giving differentially high tax breaks to people at the top end of the income scale, he is contributing to a massive and extremely damaging increase in imports and consumption. That has given rise to the extraordinary news that the trade gap expected for the whole year has now been massively exceeded in the first five months of the year, to the tune of £4·7 billion.

Mr. Major: The hon. Gentleman makes some interesting observations, which suffer from only one defect: they are all wrong. The principal redistribution in the tax system is that there is now an increasing yield from corporate taxes because of the profitability of industry and

commerce. That is why the sum total of the tax burden remains the same and has not fallen, and the burden of income tax has dropped—a very desirable development.
Yesterday we heard an interesting proposition about borrowing from the hon. Member for Islington, South and Finsbury (Mr. Smith). Uncharacteristically, he praised the virtues of the Government's being in debt and borrowing rather than balancing the budget and being out of debt. That is a remarkable proposition. His speech was not a casual aberration; its substance seems to have been carefully press-released and circulated, apparently before the new clause was selected.
The only virtue in the hon. Gentleman's speech was that it called forth a gem of a response from my hon. Friend the Member for Eastbourne (Mr. Gow). Those who heard the debate will understand what I mean. I propose to place my hon. Friend's speech beside my bed for constant reference. It can sit there in precisely the same way as the speeches of the former Labour Prime Minister, Lord Callaghan, and the letters to Dr. Johannes Witteveen from the former Chancellor, the right hon. Member for Leeds, East (Mr. Healey), sit beside my hon. Friend's bed. Yesterday was a memorable occasion, and the most memorable aspect of it was the remarks of my hon. Friend the Member for Eastbourne.

Mr. Chris Smith: The Chief Secretary to the Treasury will, of course, have read the text of my speech in Hansard, rather than rely on his rather wayward recollection of what he thinks I might have said. If he reads my speech, he will find that I said:
Inevitably from time to time a Government will need to borrow. There will be times when a Government want to be in surplus. It all depends on the circumstances at the time."—[Official Report. 13 July 1988: Vol. 137, c. 396.]
That is what his hon. Friend the Member for Eastbourne also said.

Mr. Major: I also had the pleasure of listening to the whole thrust of the hon. Gentleman's remarks, which, as hon. Members who were in the House will recall, was precisely as I have described it. What the hon. Gentleman cannot take is the fact that the Government's finances are in surplus. The current account deficit, of which he tried to make so much a moment ago, essentially reflects purely private sector behaviour. That is a factor that the Opposition frequently tend to ignore. The contrast with the deficits over which the Labour Government presided could scarcely be more stark. Under Labour, a balance of payments deficit meant a balance of payments crisis. Today, that is certainly not the case.

Mr. Smith: I must ask the Chief Secretary to put the record right and to agree that the comment I have just read out is an accurate quote fron the Hansard record of our proceedings. It is there on the record, from yesterday's discussions. The right hon. Gentleman has been attempting to paint my remarks with a complete fabrication of reality.

Mr. Major: I do not doubt that the partial quotation that the hon. Gentleman gave reflected a portion of his speech. If he wishes to redefine his speech and say that that is what he meant, the House will observe that. I stick by the fact that the impression given by the whole of the hon. Gentleman's remarks yesterday was precisely that which I have described, and I do riot renege from that in the slightest.

Mr. Morgan: Try facts for a change.

Mr. Major: The hon. Member for Cardiff, West (Mr. Morgan), screaming like a banshee from a sedentary position, suggests that I should try facts for a change. Judging from the hon. Gentleman's record, he would not recognise a fact if it jumped up and gripped him by the windpipe.
The Budget's aim was not to boost demand, but to improve supply side performance. Tax reform is not the sole route to that objective. We have removed a whole battery of the constraints and regulations that acted as barriers to growth. We have at every opportunity extended competition and flexibility. We have allowed managers to manage, given trade unions back to their members, and minimised Government intervention in the affairs of industry and of the industrialists who create wealth and jobs. Through the manifest success of privatisation, we have dramatically extended ownership and removed a substantial section of British industry from state control. The result can be seen in industry's improved performance.
Tax reform has played a vital part in improving the economy's performance, and that performance is the overriding test by which those reforms stand to be judged. The record is overwhelming, and the Opposition know it. We are now entering the eighth successive year of sustained growth averaging 3 per cent.—a performance not equalled for half a century. We are at the top of the European growth league, after two decades at the bottom. Inflation is back to the levels of the 1950s and 1960s, and, in manufacturing industry, productivity has risen by more than 5 per cent. per year—faster than in any other major industrialised country. That is a remarkable turnaround for our country.
Far from that being the short-lived "boomlet" beloved of Opposition spokesmen, who believe that stop follows go, as night follows day—they proved it when they were in government—the outlook is for higher investment and continued growth. The latest CBI survey continues a run of surveys confirming, yet again, industry's strength and the high level of confidence about business prospects generally. This year, investment intentions have strengthened substantially, with the DTI's June survey predicting that manufacturing investment will rise by 16 per cent. in the present financial year.
The economy's strength has created the conditions for the longest period of falling unemployment since the war. Among other things, that has confounded the prediction of the hon. Member for Dunfermline, East (Mr. Brown), who, in October 1986, wrote in "Friday Agenda" in The Guardian:
The Government simply cannot reduce unemployment by present economic policies".
That is what he wrote. Perhaps people believed him then, but they know better now. Even the hon. Gentleman can see that unemployment is falling in every region of the country and that some of the largest falls are among the long-term unemployed. If the hon. Gentleman catches your eye, Mr. Speaker, he may care to comment on that article, on why he was wrong, on how his perspective has changed, and on what he now proposes to do to revise the Opposition's policies, so that they may follow those which are proving so successful for the Government at present.
Only this morning, figures were released showing another significant fall of nearly 40,000 in unemployment,

in June. That is the 23rd successive monthly fall. The figures also show another significant rise in the number of jobs, which is up by more than 600,000 over the past year. Since 1983, the British economy has shown a greater capacity to create jobs than any other European country. Unemployment is not falling because of some irresponsible fiscal stimulus; it is falling precisely because we have created conditions in which businesses can expand and employ more people.

Ms. Hilary Armstrong: The Government are fiddling the figures.

Mr. Major: The hon. Lady says that we are fiddling the figures. There have been 23 successive months of falling unemployment and an extra 600,000 jobs, yet she sits there and accuses us of fiddling the figures. Where has she been for the past 23 months, that she has not seen the changes?
During that same period, living standards rose at all levels of earnings. Since 1979, real take-home pay for the family man on average earnings has increased by 27·5 per cent. Between 1974 and 1979 the increase was less than 1 per cent. That is a comparison that even the Opposition may wish to ponder for a moment. For the man on half average earnings, the increase was 21·5 per cent. with us, and only 4 per cent. during the period of the last Labour Government. That is no coincidence.
Those are the results of Britain's transformation into a high-performance enterprise economy, whether the Opposition like it or not. Because they do not like it, they pretend not to notice that transformation. The electors do, as successive general election results have shown. The Bill's measures are designed to carry that transformation further forward, to consolidate and build on the achievements of the past few years.
The difference between the Government and the Opposition is that our proposals rest on a clear philosophy of reform and on a record of success that is plain for all to see. The Opposition suffer from a credibility gap and a policy gap: they have no credibility and they have no policy. In particular, they have no policy for the future, but a record of past government that they—and most of the people who lived through it—would rather forget.
Nowhere was that more clearly illustrated than in the Opposition's attitude to the Bill's most important clauses—those dealing with income tax changes. The Opposition voted against the higher tax cuts. We expected that, for it was consistent with their philosophy. However, after much agonising, and with few of their normal fanfares, the Opposition slipped quietly into the Division Lobby to vote against the basic rate reduction for 24 million taxpayers.

Mr. Nicholas Brown: We did not keep quiet about it.

Mr. Major: The hon. Gentleman says that the Opposition did not keep quiet about it. Even those masters of the press release who sit on the Opposition Front Bench failed to issue one on their decision to vote against our cut in the marginal tax rate for 24 million taxpayers. Where was the article in "Friday Agenda" in The Guardian, justifying the Opposition's vote against a cut in the basic rate? At least they were consistent, because they voted against the basic rate cuts last year, too. Very probably, they will do so in respect of any future basic rate cuts that


we may achieve, They cannot hide the fact that they are the high tax party, however many press releases they choose to forgo.
The changes in income tax are the essence of the Bill. They will produce one of the simplest personal tax structures in the world, fulfilling our pledge of a 25p basic rate, and reverse for good the absurd structure of nine higher rates and surcharges on investment income on top—the system which we inherited in 1979. The changes allow people to keep more of their own money—almost £5 a week for the man on average earnings—and thus help further to improve living standards. Another advantage in cutting taxes is that it also reduces substantially the value of tax breaks and perks and removes the need to waste time and effort in tax planning.
Opposition Members have described the Budget as one for the super-rich. No doubt they believe that, given that they have said it repeatedly. No doubt the hon. Member for Wrexham goes to sleep at night muttering that particular fact—[HON. MEMBERS: "He never sleeps."] Those of us who served on the Committee can well believe that the hon. Gentleman never sleeps.
The Opposition have said that we have done nothing for the poor, but, even after this year's Budget changes, the burden of income tax and national insurance has shifted markedly away from the very poorest toward the best off. The hon. Member for Dumfermline, East knows that—perhaps better than anyone else in the House—because the figures that illustrate that were compiled in response to a parliamentary question that he asked.
Those figures show that the bottom 20 per cent. of income taxpayers have seen real reductions in their average liability since 1978–79. The liability for the lowest 10 per cent. is down by 19 per cent. The top 10 per cent., however, are now paying 26 per cent. more than they were in 1978–79, despite the reduction in the top income tax rates from 83 per cent. to 60 per cent. and now to 40 per cent. In some eyes the old regime may have appeared to share the burden of tax more fairly. I understand that, but, because so few people actually paid tax at those absurdly high rates, the burden was less fairly shared than it is now. The reality is that Labour's income tax fairness was a mirage—our income tax reductions are real and they are there for all taxpayers.
As I have said before, the overriding logic and justification for the reforms is not to point up the ineffectiveness of the Opposition—enjoyable and necessary though that may be—but to strengthen the supply performance of the economy. The Chancellor made that absolutely clear in the Budget debate when he said that the changes are not a reward, but a challenge to British business. That is his fundamental argument, with which I entirely agree. I believe that business also agrees with it. The Association of British Chambers of Commerce said:
We wanted incentives. We have got them.
The message is also understood abroad—[HON. MEMBERS: "What about the CBI?"] I am intrigued that hon. Members should mention the CBI. I remind them that after the Budget the CBI said:
This is the Budget that we have been waiting for. It will provide greater incentives for all in British business.
That was the CBI's stated position after the Budget.

Mr. Doug Henderson: Is the right hon. Gentleman aware that the northern division of the CBI thought that the Budget was most damaging for

jobs in the north and that it was especially critical of the extension of the business expansion scheme to housing in London?

Mr. Major: I was quoting the views of the national CBI, but I hope that its northern branch and the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) will also observe the greatly improving employment prospects in the north, the north-west and all the other regions of the United Kingdom, where there has been a significant improvement in the past 23 months. I hope that that gives pleasure to all hon. Members.
Although the income tax changes were undoubtedly the most important, the Finance Bill introduced other considerable changes which will create a more just and, in my judgment, a more efficient tax system. Lower income tax rates have enabled us to achieve a radical reform of the taxation of capital gains, aligning rates with those on income and thus reducing the incentive to convert income into gains, or to pursue speculative gains to avoid higher rate tax. That measure, at least, was welcomed by Opposition Members, although, as usual, despite their welcome, they failed to recognise that that desirable change was possible only in parallel with the changes to income tax that they rejected out of hand.
The Bill also brings to an end the injustice of taxing pre-1982 gains, which owed much to the excessive inflation of Labour's years in office. Inheritance tax has been radically simplified, with a further increase in the threshold and a single rate of 40 per cent. Outside the North sea sector, the Bill will leave no tax rate above 40 per cent. The Bill abolishes capital duty altogether, the fifth tax removed by my right hon. Friend the Chancellor. I trust, in due course, that he may be able to improve on that record.
The Bill brings about a radical improvement in the structure of personal taxation, giving married women full independence and privacy in their tax affairs—a reform long overdue. It has been widely welcomed in the House and outside. The ending of the anachronism of aggregation will be welcomed by all married women, and a large number of married pensioners will also be better off.
Other measures in the Bill end the absurd and anomalous tax penalties on marriage, which had no place in any sane or satisfactory tax system. Taken together, the reforms provide a fair deal to married couples and to married women in particular; and, as importantly, they are reforms which can be implemented speedily. Married women have been waiting nearly 180 years for equity in the tax system. It is right they should not be asked to wait much longer, and with this Finance Bill my right ho n. Friend has ensured that they will not.
On top of the reforms, which in themselves add up to a substantial catalogue of change in areas previously found too difficult to tackle, the Bill contains a whole raft of measures designed to remove anomalies, reduce the scope for abuse and generally simplify the tax system. Ending relief for home improvement loans and hence focusing mortgage interest relief on its true purpose of promoting owner-occupation, taking forestry out of the tax system and tackling the under-taxation of company cars have all made their differing contributions to making the tax system fairer between individual taxpayers.
I have sought to make it clear that the Bill is primarily about improving supply performance. Better labour mobility is a vital element in that. The business expansion scheme already has a clear record of success. By extending


it to the private rented sector we are giving a boost to housing deregulation, which is vital to achieve that objective. Deregulation is the key to extending real housing choice to the many people who cannot or do not want to be owner-occupiers, or at present have no choice other than a local authority house or a place on a council waiting list in an area without jobs.
The clause on this matter has provoked the Opposition as no other, for I fear that they are concerned at any measure that may break the local authority monopoly on rented housing. That may precipitate the end of their municipal fiefdoms, for surely they are coming to an end. Any contribution that this measure can make to creating a genuine private-rented sector in this country will bring positive economic and social benefits far outweighing the cost in revenue forgone.
The measures that I have outlined amount to a fundamental reform of the tax system and, not surprisingly, they have been unchanged in Committee. However, there are a few significant amendments, which I should mention to the House.
A principal theme of the Bill is that, as tax rates come down to sensible levels, it is as important as ever to ensure that everyone pays their fair share of tax. In Committee we have bolstered the company migration rules to ensure a capital gains tax charge when a company ceases to be United Kingdom resident by reason of a double taxation convention, plugged the loophole whereby restrictive convenants can be used as a tax-avoidance device, and prevented the use of trusts to avoid the higher tax rate on capital gains.
We have balanced those tightening-up measures by making a number of relaxations, most significantly on capital gains tax. Provisions were tabled on Report to give some benefit from rebasing in cases where, between 1982 and 1988, assets were acquired when holdover or rollover relief was claimed. We have enabled elections to be made for gains on certain pre-1982 assets to be computed by reference to 1982 values irrespective of acquisition cost. Those amendments were inspired by suggestions from Committee members and we were happy to accept them. The second will be a welcome simplification for those who make an election because it will remove the need to keep pre-1982 records. The company residence rules have been rationalised in various respects. In particular, certain United Kingdom incorporated companies that were non-resident at Budget day have been excluded from the ambit of the new regime.
My hon. Friend the Member for Croydon, South (Sir W. Clark) persuaded us that it was right to extend the special £5 million BES ceiling for ship chartering companies to those which operate their own ships. I was also pleased that we could make a worthwhile relaxation in the tax rules for seafarers which should ease the cost pressures on United Kingdom operators and allay fears about the availability of British-crewed ships for defence purposes.
One of the most remarkable features of these reforms is that they have been introduced against a backdrop of the soundest public finances that we have seen in decades. Important as tackling the supply side rigidities is and remains, our overriding priority remains the continued suppression and reduction of inflation. We give others

incentives to take risks for the benefit of the country's future; we do not propose to take risks which would not benefit the country's future.
Perhaps one mark of my right hon. Friend's achievement in the Budget which paved the way for this Finance Bill is this. If he were prepared to tolerate the levels of borrowing seen under the Labour Government, we need not have been debating the reduction of basic rate tax from 27p to 25p; we could have been debating the complete abolition of income tax. We prefer to move rather more cautiously. Once the Bill is on the statute book, we can look forward to further tax reductions—to the reduction of income tax to 20p in the pound. But I can give the House the assurance that we will not achieve that objective on the back of a burgeoning Government borrowing requirement now or in future. But achieve it we most assuredly will, and as soon as we prudently can.
Meanwhile, I invite my right hon. and hon. Friends to give this momentous Bill its Third Reading.

Mr. Gordon Brown: When we are debating the most controversial financial measures that any Government have introduced since the war, when we are debating a Bill which has been debated more days in Committee than any other Finance Bill of this Parliament and when we are debating a Bill the contents of which are infused with measures which promote selective generosity towards the rich, both sides of the House will agree that we might have expected the presence of at least one Social Democratic and Liberal party spokesman. It is remarkable that the relaunch of that party in the country has been accompanied by its virtual disappearance in the House. But at least that party is consistent. To miss this Third Reading debate is entirely in line with its performance in Committee, where it missed just about every sitting when major measures were being discussed.

Mr. David Wilshire: Surely the hon. Gentleman understands that it is probably more important to both parties to slug it out to see which comes bottom in today's by-election.

Mr. Brown: I am grateful to the hon. Gentleman for pointing to another problem that faces the Liberals in their battle against the SDP led by the right hon. Member for Plymouth, Devonport (Dr. Owen).
I hoped to enjoy the Chief Secretary's speech, which, given the advance publicity of the new role that he might expect in the Government, we might have expected to be statesmanlike and to concentrate on the detail of the tax reform. But his speech seemed to be designed for the Prime Minister to read rather than for his colleagues to hear. I noticed that at least four of his colleagues, including the chairman of the Conservative party, dropped off to sleep for at least some moments during his remarks.
I understand the difficulties that the Chief Secretary faces. He is now working under the watchful eye of the Secretary of State for Energy who has been promoted to head of the Star Chamber and is the Chancellor of the Exchequer in waiting. We know that any spending decision that is popular will be attributed to the Secretary of State for Energy and that any decision which is unpopular, unfortunately, will be blamed on the Chief Secretary.
That is not the only problem facing the Chief Secretary. The cuts that he may impose as Chief Secretary in the next few months he may have to administer in a new role as Secretary of State for Social Services, if we are to believe the report in The Guardian on Monday. The reputation of toughness that he builds as Chief Secretary will destroy for ever his chance of gaining a reputation for compassion, if he were to arrive at the Department of Health and Social Security.
Perhaps the Chief Secretary's biggest problem is that he has been named, not least by The Guardian, as a favourite of the Prime Minister. He is a central figure at her court—someone who has been feted and no doubt invited to Chequers. But I know that the Chief Secretary is a cautious man and he will be aware of the fate of others who have been similarly feted, not least the Foreign Secretary who, in the Prime Minister's eyes, might as well be in the Foreign Legion as at the Foreign and Commonwealth Office. The right hon. and learned Member for Richmond, Yorks (Mr. Britian), who is not present this afternoon, is having to choose between exile in the House of Commons and a more lucrative exile in Brussels, if that is how the decision goes.
Missing from the speech of the Chief Secretary was a willingness to address himself to the central problems of the Finance Bill. The Budget, which almost all the country regarded as unfair when it was announced in March, is, as we warned, now also seen to be ill-judged. It is unfair because with the top 1 per cent.—no matter what figures the Chief Secretary produces, he cannot deny this—securing 31 per cent. of the Budget's spoils and more than the bottom 70 per cent. of the Budget's handouts, and with the gains to the top 1 per cent. being not just income tax handouts, but exemptions from capital gains tax and inheritance tax, the business expansion scheme and other tax loopholes, this Budget has done more to widen the gap between rich and poor than any Budget at any time since the second world war.
The Budget is also ill-judged and imprudent. When we said to the Chancellor that there was an imbalance between investment and consumption in the economy and a need for greater investment, particularly in the Health Service, for which there was an economic as well as a social case, he was instead determined to pursue a strategy of top-rate tax cuts. When we said to the Chancellor that there was an imbalance between the shires and the suburbs, and the regions, that there was overheating, congestion, pressure on the green belt, escalating house price in the shires and the suburbs but underused resources in the regions, which should benefit from the Budget, he chose a tax-cutting strategy with most benefit going to those already well off in the most prosperous shires and suburbs.
In contrast to the clear advantages that would have been gained from a strategy which involved targeted investment on our public services, instead of top-rate tax cuts, the strategy is backfiring, first, by worsening the credit boom, forcing up interest rates and adding to fears about inflation and, secondly, by creating a situation in which we shall pull in more imports and the balance of payments will worsen.
We are already seeing the effect of that in two areas. The five rises in interest rates which have pushed up industry's costs by £600 million on top of the 11 per cent. rise in electricity prices, which also cost £600 million for a full year, are making it more difficult for industry to

compete with our competitors abroad. Secondly, as a result of the five interest rate rises, we are about to experience mortgage rate rises.

Mr. Major: If it is so difficult for industry, why is there an investment boom, the like of which we have not seen for many years?

Mr. Brown: The Chief Secretary would be the first to admit that even if all the CBI's predictions about manufacturing investment were to bear fruit—none has in the past—the rate of manufacturing investment in real terms would still be below the level left by the Labour Government in 1979.
If the Chief Secretary doubts my figures, let him consult the excellent brief produced on these matters by the Library. That shows clearly that even if manufacturing investment rose by the amount that the CBI has stipulated in its investment intentions survey—it wa quoted by the right hon. Gentleman—investment in real terms would still be below the 1979 level. I checked the figures this afternoon with the statisticians in the Library. If the Chief Secretary really believes that the Government have a good record in manufacturing investment, which is still below the level of 1979, he must set low targets for the Government's performance.
The second effect of the Budget, adding to the rising credit boom and the worsening balance of payments, has been the rise in interest rates, which are now forcing up mortgage rates. What people gained in tax cuts from the Budget they are now beginning to lose in price rises and mortgage rises that have followed from it. The tax handout was followed by the mortgage clawback—the clawback perhaps the inevitable and delayed consequence of the handout—with the spending power that the Chancellor appeared to offer in March being reined back in July. The consequence is that that they have wiped out most of the gains for almost every group, with the exception of the top few.
The Budget is backfiring on the Chancellor. In the past, commentators have praised the Chancellor, but now the Financial Times is saying that he is skating on thin ice, It is no wonder that the Chancellor has to resort to calling commentators, whom he has praised in the past, teenage scribblers anxious for a quick headline.
Let us examine the impact of the Budget on families. We know that 7 million people on supplementary and other benefits did not benefit from the Budget and, in March and April, many of them experienced social security cuts. About 2 million people thought they were getting a 2p in the pound tax cut, but eventually they discovered that because their tax cut was followed by the withdrawal of housing benefit or family credit they ended up no better off and are facing large price rises as a result of Government decisions.
We know that the average extra bill for people who are paying mortgages is likely to be about £3 to £4 a week—for first-time buyers £4 to £5 a week-if mortgage rates go up by 1 per cent., as the Chancellor appeared to be predicting last week. On top of that, as my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) said at Question Time, ordinary families face price rises for electricity of 11 per cent., for water of 10 per cent., for prescriptions of 8 per cent., for rents of 11 per cent., for gas of 6 per cent.—and now there are charges for eye tests and dental check-ups, too. Almost every benefit that


low-income families might have expected from the Budget has been wiped out by the price and mortgage rises that are on the way.
A home owner in my constituency on an average wage who has just bought a house on a high mortgage faces a large increase in his weekly payments. On top of the price rises that he must pay for electricity and everything else, he finds himself worse off even if he has had a £4 a week tax cut in his pay packet this month.
That is why we calculate that the Budget, which was to give a £6 billion handout, which was claimed to be the Budget for everyone and from which all families were going to benefit, has now, after the social security changes, the mortgage rises, and the freezing of child benefit, left 1 million families more than £4 a week worse off, 3 million families more than £2 a week worse off, and 9 million families will have lost money after the post-Budget clawback in price rises and mortgage increases. Large numbers of families will gain about £1 or £2 after the tax changes, but they will find that price rises in the family budget for electricity and everything else will wipe out that gain.
We started with a Budget that promised a £6 billion annual giveaway. It succeeded, however, in making millions of people worse off as a result of social security changes, price rises and mortgage rises. Interest rates have risen five times in the past month, which has started to damage British industry. These are not the marks of the most successful Chancellor since the war, as Conservative Members might like to think, but of a failed Chancellor who is now seen to be guilty of mistaken policies that are backfiring on the Government and on millions of people in this country.
If the objective was to ease the credit boom, to attack inflation and to help our balance of payments, if, having decided that there was an imbalance between investment and consumption, the aim was to help investment and aid the regions most in need, where there are underused resources, a proper Budget would have been an investment Budget. It would have invested in the Health Service, which was the one issue that almost everyone agreed should have been the Budget's first priority. The Budget should have invested in education and the rest of the public services.
No matter what the Chief Secretary produces this or any other afternoon, as a nation we still invest less as a share of our national income in ourselves than any other industrialised country, with the exception of Belgium. We invest a lower share of the national income in ourselves than countries with which the Chief Secretary would not want to compare us—Spain, Turkey, Greece and Portugal.
I emphasise the scale of underinvestment in British manufacturing industry and public services. If, with all the oil resources that we have enjoyed since 1979, we had invested at the same level as Japan, our assets today would have been £350 billion more than they are. If we had invested at the same level as Germany, they would have been £100 billion more. If we had invested at the same level as the much-criticised last Labour Government, investment over the past nine years would have been £50 billion more. Instead, we have wasted a once-for-all opportunity from North sea oil and the taxation it yields to invest properly in our public services, in education and health, in

our infrastructure, in industries and technology, in research and development, and in science and innovation. All those are vital to our future.
One of the results of our failure to invest, apart from the high pound and high interest rates, is our worsening balance of payments deficit, not only in our traditional industries but in high technology industries. The Chancellor had the choice between investing in the Health Service and social services, but his priority, like that of the Conservative party, has always been to give to those who already have, even if that means making millions of people worse off.
Let me tell the Chief Secretary how much he and the Government have given the top 1 per cent. since 1979. The Government looked at the plight of the top 1 per cent. just before Budget day. It was not enough for them that they had reduced top rate taxes by 23 per cent. in the first Budget, that top rate thresholds had been raised, that capital gains exemptions had been given, that capital transfer tax had been abolished, or that tax loopholes had been opened up in so many ways. The cumulative effect of tax cuts since 1979 for people in the top 1 per cent. was to give them an extra £10,000 a year in tax cuts alone, £100,000 in total or £200 a week. That was by way of a gift from the Government, and it was more than most people are paid in a week merely as tax cuts.
But this was not enough for the Government. They looked at the problems of the top 1 per cent. and found that they were earning, on average, £75,000 a year. The Treasury computer showed that they would increase their incomes by 13 per cent., that they would do for themselves everything that they wanted to deny their work forces and that they would still enjoy enormous perks. Having seen all that, the Treasury decided to give this group an extra £10,000 a year, on top of the £100,000 that it had already received since 1979. There has been no evidence since the Budget that this group of people has worked harder. I saw no evidence of cancellations at Henley, Wimbledon or Ascot, or of cancellations of holidays in far-off places so that those people could work harder. There is no evidence that this group is more productive, hard-working or industrious, but there is evidence that they are wealthier as a result of what the Chancellor has done.
We are told that those people need an incentive to work harder. We also hear the argument, produced by the Chief Secretary this afternoon, that tax reductions on unearned income are essential so that people invest. However, we know that the record of investment in our manufacturing industry is very poor—even with the top-rate tax cuts made immediately after the Government came into office in 1979. There is no study to which either the Chancellor or the Financial Secretary—hard though he tries—can point to prove that tax cuts are necessary for incentives.
The need for incentives to make people work harder does not explain why the Government have given £200 million in tax relief to those whose pre-1982 capital gains tax liability has been wiped out. The need to work harder cannot justify the £235 million in tax relief for those who inherit—[Interruption.] The Chief Secretary had better keep quiet about the number of hon. Members who are asleep during speeches from the Front Bench. I counted the former Leader of the House, the Conservative Chief Whip and the chairman of the Conservative party, and perhaps the Chief Secretary's PPS will tell us that he was asleep as well.

Mr. Major: As it happens, my hon. Friends were lost in wonder, but it is a matter of fact that the hon. Members for Islington, South and Finsbury (Mr. Smith) and for Newcastle upon Tyne, East (Mr. Brown) were both enjoying a gentle doze while the hon. Gentleman was speaking. [Interruption.]

Mr. Brown: My hon. Friends deny it. I must say, however, that the Chief Secretary's intervention is on a par with his intervention in a previous debate when he talked about Woman's Own. We expect major statements from the right hon. Gentleman, who has been much advertised as the coming star in the Government, but when he rises to speak it is merely to tell us that one or two people in the Chamber are not awake. He will be hoping that the Prime Minister does not read the Hansard report of this debate, in case the invitation to Chequers is withdrawn.
The need for incentives does not explain why the self-employed, for example, are able to pay their tax on last year's earnings at rates decided for this year. The Chief Secretary has also been unable to explain why £700 million has been given in tax cuts on the unearned income of the top 1 per cent. who are already extremely rich. Much as he tries, he cannot explain what justification there was in the Chancellor's mind for denying pensioners housing benefit, freezing child benefit and introducing a social fund to replace single payments, all at a cost of £700 million, and then handing that over to the people at the top.
The results are beginning to be seen. I telephoned my social security offices a few days ago to ask what had happened as a result of the implementation of the social fund. The office was able to tell me that while the top 1 per cent. are walking away with an average of £10,000 a year in tax cuts, of the applications made for help from the social fund—to help pay, for example, for heating or for journeys that had to be undertaken—one third, 166, had been turned down in the first two months. They had been turned down because the office had said that they were not priorities, because there was not enough money in the social fund budget to justify the payments or because the applicants would not be able to repay the loans from their meagre supplementary benefits. How can the Chief Secretary justify circumstances in which people are not even given the basic dignity of help with key requirements such as heating, food and clothing, while the top I per cent. are given £700 million in tax relief on unearned income?
We were told at the beginning that the Budget was a Budget for all. That was revised, and we were then told that it was a Budget for the meritocracy. Then, when we found that the scientists, engineers, researchers and doctors were not such great beneficiaries, we learned the truth. It is a Budget fuelled by selective generosity towards the very rich. It is motivated not by academic theories such as supply-side economics or trickle-down theory, but by greed dressed up as ideology: greed to reward those who already have a great deal by denying to many millions money that they desperately need.
We know that the Government are prepared to ignore the evidence of the churches and other organisations that tell them about the growing gap between rich and poor and the social polarisation in our communities. We know that they are prepared to ignore the warnings of Conservative Back Benchers who ask for a change of course. We also know that they may try to ignore even their own Cabinet members. The Prime Minister is blind to

the warnings of the Foreign Secretary, who spoke at Christmas of the danger that social tensions would be exacerbated, and said that the Government still had a long way to go in tackling them.
The Government may ignore the warnings of the Home Secretary, who has said that there is a danger to social cohesion in our communities as a result of the policies being pursued. They have, of course, ignored the warnings of the former Deputy Prime Minister in another place, who said that a little more compassion was needed. But they cannot continue to ignore the warnings of the general public, who in survey after survey show that they are not the narrow, blindly acquisitive, self-seeking individualists that the Prime Minister and her Ministers would have them be. They see the injustice of great economic inequality. They appreciate the contrast in a Budget and Finance Bill that give £2 billion to the rich and at the same time freeze child benefit, cut housing benefit, introduce charges for eye tests and dental check-ups, and push people into having to pay much higher mortgage rates. They also appreciate the waste, inefficiency and, now, incompetence with which the economy is being managed, so that, with interest rates and mortgage rates rising, the gains from the Budget are already being wiped out.
Because the Budget has backfired on the Chancellor, this is a bad Bill which no number of new, good clauses could make into a better Bill. The House should reject it and everything for which it stands.

Mr. John Biffen: The impresarios of the debate are to be congratulated. Rather than being scheduled in the narrow terms of a conventional Third Reading, the debate gives us the opportunity for a wider judgment on the economy. I should like to take advantage of that and make two quick preliminary points before turning to the one matter of substance with which I wish to detain the House.
My first point takes account of the fact that economic and Treasury affairs are a seamless robe, never ending. We are having this debate on the self-same day on which. I understand that the Cabinet went through its process of determining public expenditure levels and targets for the coming year. My right hon. Friend the Chief Secretary will go forth reinforced by that discussion and armed with his meat cleaver, and purport to be a surgeon.
I should like to give a kindly word of advice about the public expenditure task that my right hon. Friend will be attempting as it relates to the National Health Service He clearly has a major task in terms of his responsibility for public spending, but he also has a political task: to have a well-ordered sense of priorities, and not to view every spending Minister as potentially on the other side. As has already been said, his welcome and deserved ascent in his ministerial career will put him in charge of great spending responsibilities, and he would therefore be well advised to show a little delicacy, particularly in his approach to the National Health Service.
What I have in mind—this was touched on earlier this afternoon—is what may turn out to be the full cost of the increase in nurses' and related grades' salaries and, above all, the regrading that will be associated with that. It is a matter of some complexity which has meant that, from the outset, there could never be a precise figure, but only an estimate. If that outturn proves to be significantly higher


than the estimate of the review board, and clearly beyond what is within the capacity of the area health authorities to master, it should be treated by him with the generosity which we know he has in private life, and which sound political judgment would also commend. I hope that my right hon. Friend will take those fraternal greetings from a former Chief Secretary, who, I might say, has never quite recovered from the experience, and that he will prove to be a good ally to the National Health Service in the discussions that lie ahead.
The second modest point with which I should like to detain the House for a moment is that reiterated by my right hon. Friend when he said that he was looking forward to an income tax rate of 20p in the pound. That objective is quite heroic and is certainly attainable, but it implies certain suppositions that should be shared with the House. The Treasury is forecasting a modest drop in the rate of economic growth. That does not come as a great surprise. I am assuming, therefore, that we may take as a starting point for the rest of this Parliament a rate of economic growth that is not merely a straight-line projection from the recent past. In other words, growth alone will not necessarily deliver the resources for that kind of tax change.
I am also assuming that there will be a certain political wisdom which will assume that public spending must be judged on its own merits and, in certain directions, will necessitate further increases, although I would be on the side of those seeking to obtain as much general economy as possible. However, I am assuming that there will not be great retrenchment in public spending to enable that change to come about. It is just possible, therefore, that it may come about as a result of a redirection of our tax balance so that it relates more to one's capacity in spending than it does to earning.
As a general proposition that may excite some anxiety, but the anxiety that it properly engenders is whether we will be the arbiters in that, or whether we will find that the value added tax that would lie at the heart of any such switch will be determined, not in this House, but elsewhere. The European Court indicated, over a relatively modest range of activities, what were to be our VAT rates. It is an open debate whether 1992 and the single market require a single pattern of VAT, uniform across the Community, or whether the sovereign nation states will still be given options on VAT and the House of Commons will remain supreme in those fiscal affairs.
I do not travel very hopefully. If the House is anxious to maintain its supremacy in those matters it will have to act with the utmost vigilance and it will, from the very outset, have to have much clearer understandings from the Government than hitherto about their overall views on VAT. That is of particular relevance when one considers the objective of a 20p in the pound rate of income tax. Tax switching will be central to that decision.
I wish to deal now with the one point of substance that I want to raise. It relates to clauses 23 and 24 and the major tax changes referred to by my right hon. Friend the Chief Secretary and the hon. Member for Dunfermline, East (Mr. Brown). I wish to relate those changes, which have certainly added to immediate purchasing power, to the inflationary pressure that could be perceived at the time of the Budget. Iain Macleod used to say that Budgets look

very different after 24 hours. That was certainly true with regard to presentation. He said that of Labour Budgets. I am merely trying to be generous to both sides of the House.
Four months have now passed between the Budget and Third Reading this evening. The three specific indicators of an inflationary pressure are worth recalling and putting on record. Bank lending, which, in mid-March, showed an annual increase of 20 per cent., has now increased to 27 per cent. United Kingdom house prices, which showed an annual increase of 16 per cent., have now increased to 19 per cent. The annual earnings increase, which was 8·5 per cent., is at approximately the same level. Although figures for labour shortage cannot easily be identified, the Association of British Chambers of Commerce has just produced a regional survey which shows that the developing labour shortage is, if anything, sharper than it was a few months ago.
Those are statistics. They do not compel a conclusion, but they cannot easily or lightly be disregarded. However, there is one new factor to be added to anxieties about the extent of tightness or overheating in the economy, and that is the trade balance. When we debated the Budget we heard a Treasury forecast of £4,000 million on the current account as the expected deficit. After about five months of the year we know that the figure is already in excess of that, at £4,700 million, and that the figure for May, £1,705 million, is the largest current deficit ever recorded. Some of that may be explained by the restocking of raw materials and capital goods associated with an expanding economy and some of it can obviously be related to very strong demand in the high street. However, I find it extraordinary that the Treasury could come out with a figure of just £4 billion when that figure has now been overtaken on such a massive scale in so short a time.
If we take either of those factors—restocking because of the so-called boom or high-street purchasing—the Treasury was not making the appropriate analysis when it produced that figure. That statistic alone, when added to the others that I have mentioned, gives rise to a wholly legitimate anxiety which is in no way intended to undermine the respect and admiration for many of the major tax reforms that my right hon. Friend the Chancellor of the Exchequer and his team have produced in the Budget and the Finance Bill.
Given those figures of incipient and perceived demand now growing in the economy, it is a matter for judgment whether the tax cuts erred on the side, not merely of generosity. but of wantonness. That question looks a good deal more uncomfortable today than it did four months ago.

Mr. Alistair Darling: I noted that when the right hon. Member for Shropshire, North (Mr. Biffen) was praising the Chief Secretary, he paused for a moment. It is probable that the Chief Secretary thought that if the Prime Minister read praise of him from that quarter it might impede his so far rapid rise in her favour.
We have said from the time that the Chancellor of the Exchequer introduced the Budget that it is one of contrasts. This is not a time of crisis for the United Kingdom generally, but many individuals are facing great personal difficulties. There is the unfairness of tax cuts for those who are at the top end of the income scale and of


benefit cuts for those who are at the bottom of the income scale, or who have no income at all. The Government are happy to tighten the screw on those who have little or nothing, while being generous to those who have done well, as my hon. Friend the Member for Dunfermline, East (Mr. Brown) said. Payments are being tightened for those who have to claim benefit, but, in the operation of the business expansion scheme, the Government are happy to enter into open-ended commitments for those who would seek to use tax breaks to provide accommodation for those who are at the bottom end of the income scale.
As I understand it, the Government's primary aim is to ensure that inflation is kept under control. The Government say, rightly, that inflation has dire effects, especially on those—they do not accept this—who will lose as a result of the Budget and the Bill. I am talking about those who will not enjoy the tax breaks that we have been discussing.
The majority regard a house as the provision of a roof over their head rather than an investment, and the position that this majority faces is grave in both the purchasing and rented sectors. It has been said that tax cuts are inflationary, and we know that house prices are escalating. We are told that house prices add about 0·4 per cent. to the retail prices index. When the Chancellor of the Exchequer was discussing inflation this afternoon, we were astonished when he distinguished two sorts of inflation. He said that the inflation of house prices did not really matter—at least, he could not control it—and that the other form of inflation that he could control was the one that mattered. That will come as news to those who buy houses or those who have to rent houses. To those people, the increase in prices is very much part of the inflationary package with which they have to deal.
There is a credit boom. We are told that there is £1 billion more credit this year than last year. However, there are many who are finding it difficult to make ends meet. They have to borrow more and more to ensure that they have a roof over their head, not because they desire to increase their spending or to improve their standard of living, although that is without doubt the motivation in some instances. Yesterday, on Report, the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) said that he regarded a house as a sterile asset. That is the hon. Gentleman's approach, but most people buy a house because they need it, not because they want to invest in a house as opposed to some other asset.
The plight of the first-time buyer is grave. There are escalating house prices for those who want to buy and escalating rents for those who want to rent, especially in the south-east of England and certain other areas. No tax relief is given to those who seek to rent. Why should not the same relief be given to those who want to buy and to those who want to rent? Sometimes it makes good economic sense to rent, especially at the beginning of a person's working life or when he has retired. Instead, we choose to give blanket mortgage tax relief whatever the individual's circumstances, subject to minor restrictions.
The Nationwide Anglia building society's latest survey shows that a three-bedroomed house in Haringey costs £1 13,000. The top prices in five London boroughs for a three-bedroomed house are all over £100,000. An equivalent house in Aberdeen would cost £50,000 and in Edinburgh £46,000. In Edinburgh, where I live, there are flats retailing in the new town for over £200,000 that would have cost £20,000 or £30,000 only seven or eight years ago.

I read a speculative article in The Sunday Times this weekend, that the Government might be considering a form of capital tax on gains made through the sale of houses. There are many who would not understand that proposal. The Government would be taxing an inflationary increase that has been brought about through no fault, in most instances, of the owner of a house.
The Government will have to address themselves to rising house prices. There are many, especially those who are seeking to buy a house of their own for the first time, who are being priced out of the market. I suspect that the majority of hon. Members are living in houses that they have bought and lived in for some time. Alternatively, they are in their third, fourth, fifth or sixth house. We must bear in mind those who are leaving home and seeking accommodation for the first time, whether rented or purchased. Such people are facing an extremely difficult task. It is ridiculous for the Chancellor of the Exchequer to say that house price inflation has nothing to do with the Government and that there is nothing that they can do about it.
The Government could restrict mortgage tax relief to first-time buyers, and give similar relief to those who seek to rent for the first time. The Government could adjust their regional policy to ensure that industrial development is not concentrated in the south-east of England and that inflationary pressures are not built up in the area. The Government, through the Ministry of Defence, are a large employer. They could act to ensure that decentralisation works. Most defence installations are in the north, but most of those who run them seem to need to live in the south. I do not understand why that should be so. Some of the commanding officers and some of the high-ranking civil servants could be told that, while it is handy to visit Harrods every now and again, it is not necessary for the defence of Britain that they should do so.
Increases in interest rates are accompanied by increases in house prices. Interest rates are increasing. This is a mechanism to dampen down the credit that the Government have fuelled by tax cuts. Interest rates have increased on five occasions in the past few weeks. I suppose that the Chancellor of the Exchequer would argue that this is fine tuning. He lambasted my right hon. Friend the Member for Leeds, East (Mr. Healey), the Labour Government's Chancellor of the Exchequer, for regular fine tuning, but that is exactly what he is doing now. it seems to be all right now.
Inflation is being stoked up, and it is hitting those on low incomes about whom the Prime Minister claims to be concerned. These people have been hit extremely hard by Government policies over the past few years. I am talking of those who have no choice, those who cannot afford to choose whether to send their children to a private school or to a state school, those who cannot choose whether to live in one house rather than another, those who have to choose whether to eat or to heat their homes. These are the people who have been hammered by the inflation that the Government are fuelling.
We complain about the Budget and criticise its unfairness, but those who will pay the price of the tax cuts in income forgone and in the inflation that the cuts will create will be acutely aware of the unfairness. It is all very well to help those who have been helped already, but the Government must realise that in the coming months they will have to increase public expenditure to ensure that those at the lower end of the income scale are helped. They


must understand also that they will have to take action to ameliorate the inflationary pressures that will hit especially hard those who usually bear the brunt of them.
An obvious consequence of inflationary pressures is debt. Interest charges are crucial to industry, and they are important also to individuals. The amount of indebtedness is increasing. The consumer credit boom means that more and more people are getting into debt. Many of those at the lower end of the income scale incur debt through necessity, not because they wish to obtain credit or to act imprudently.
The Chief Secretary gave us the view from the golf club, as it were, of lush green pastures and everyone doing extremely well. That is the view of the member of the golf club with a gin and tonic in his hand. Contrast that view with the reality of one of my constituents who is unemployed—she is in receipt of income support—and who recently applied for a grant from the social fund after having her first child. She was not offered a grant. Instead, she was offered a loan of £100, which she had to repay at £10 a week. That was somebody who was living on income support. The House must be aware that some people who are convicted in our courts and fined £100 pay such fines at £3 or £4 a week, yet the DHSS asked that young lady to repay her loan of £100 at £10 a week. That is an utter disgrace.
When we hear the Chief Secretary extolling the Budget's virtues, let us remember those who do not know the world that we heard talked about and who are the very people who will suffer from the inflationary pressures that the Government are stoking up. It is all very well for the Government to say that the economy is in good heart and there is nothing to worry about. The fact of the matter is that an increasingly large section of the population has everything to worry and despair about. It is clear that at present the Government do not seem to want to know. Unfortunately, the number of people who are feeling the wrong end of the Government's policies is growing day by day. That is a real tragedy and it is for that, if for no other reason, that the Budget will be remembered.

Mr. Ian Gow: The hon. Member for Dunfermline, East (Mr. Brown) began his speech by remarking on the absence from our proceedings of any Member of the Social and Liberal Democratic party or the Social Democratic party. That absence is continuing.
At the outset of his remarks the hon. Gentleman also said that this was the most controversial Finance Bill since the war. That opinion does not seem to have been shared by those who served, as I did not, on the Standing Committee that considered the Bill. Indeed, it is a strange truth that the amount of time spent considering the Bill in Committee was the shortest for any Finance Bill since the war.

Mr. Nicholas Brown: I am sure the hon. Gentleman will freely acknowledge that the Bill was debated for more days than ever before, because the Opposition sought to fight this controversial measure topic by topic.

Mr. John Maples: Press release by press release.

Mr. Brown: Perhaps, as the hon. Gentleman says, press release by press release. It is not the amount of words that were spoken on a topic that is significant, but their effect.

Mr. Gow: My point is legitimate. If this was indeed the most controversial Finance Bill since the war, many would have expected the Opposition to fight it continuously and persistently over a long period. In fact, the total amount of time spent debating the Finance Bill in Committee this year was 62 hours and 30 minutes. On five occasions the Committee rose before 8 o'clock. That total number of hours is inconsistent with the view——

Mr. John Battle: Will the hon. Gentleman reflect on the fact that the majority of Labour Members who were present throughout the proceedings in Committee that considered the Bill are present now opposing the Bill, whereas those Conservative Members who served on the Committee are not present in the Chamber to defend it?

Mr. Gow: That is a different point from the one that I was making. I was making the legitimate comment, in contradistinction to the assertions by the hon. Member for Dunfermline, East, that in reality only 62 hours and 30 minutes were spent debating the Bill in Committee, despite the Opposition's claim that it is the most controversial since the war. He did not say that it was the most controversial since my right hon. Friend the Prime Minister arrived at Downing street. His assertion was that it was the most controversial since the war.

Mr. Nicholas Brown: The hon. Gentleman is being unfair. At the beginning of the Bill's proceedings we fought hard to obtain an agreement with the Government so that we could conduct our proceedings in such a way that we had a measured political debate rather than a war of attrition. That was our choice. The Opposition's hostility cannot be measured in the crude way that the hon. Gentleman seeks to suggest. If the hon. Gentleman is urging us to return to the old way, I can assure him that my hon. Friend the Member for Wrexham (Dr. Marek), and others, will be more than willing to do so. If that is his foolish suggestion, I do not think that he will have the Government's support.

Mr. Gow: One can always tell in this place when an arrow has reached its target.
I leave that preliminary point to deal with two aspects of the wider issue of our economic policy and the Government's policy as reflected in the Finance Bill. I want to consider two aspects of inflation, which was the subject to which my right hon. Friend the Member for Shropshire, North (Mr. Biffen) devoted his speech.
I want to look, first, at the phenomenon of rising house prices. They are rising fast in the south-east, but they are probably also rising in almost every other part of the kingdom. That phenomenon has been taking place for some years, but with an acceleration during the past 24 months.
The first point that needs to be made is that rising house prices do not cause inflation. It is inflation, or incipient inflation, that is one possible cause of rising house prices, but there is another possible cause of rising house prices, and that is a definite choice made by the British people between supply and demand and between one area of investment and another.

Ms. Armstrong: Nonsense.

Mr. Gow: Of couse, that arouses great hostility among Opposition Members. They still believe that wet pavements cause rain, and that is not the truth.
I want to develop the point, because there is one sure way in which we can reduce the rate at which house prices rise, and that is to increase the supply of houses. That is the best way in which the Government can act. The Government have no control over the value that the British people wish to place on one capital asset as opposed to another.

Ms. Armstrong: Of course they do.

Mr. Gow: It is not surprising that the hon. Lady is becoming agitated. I am about to explain to her a truth that the Opposition have never understood. Since 1979, precisely because of the policies that have rightly been followed by the Government, there has been an increasing desire among people to own their own homes, and over 2·1 million more people are home owners today than was the case in May 1979. Where there is an increase in demand and an increasing awareness among fellow countrymen of the attainability of home ownership, the increase in demand will be reflected in an increase in prices.

Ms. Armstrong: Will the hon. Gentleman give way?

Mr. Gow: I shall give way to every Opposition Member, whenever he or she seeks to intervene.

Ms. Armstrong: I understand why the hon. Gentleman needs to give way. There are no other Conservative Members here to speak. The hon. Gentleman is a long-standing Member and I am a new Member. The macho idea that the late hour that one stays up is a measure of one's resistance to a Bill is rather peculiar.
The reality of house prices is that in areas such as mine there are plenty of houses for sale. In bricks and mortar terms they are good houses, but we have a declining population because of the Government's economic policy. More people want to buy houses in the south-east than in the north-east, not because of the supply of houses, but because of economic inequalities and overheating in the south-east and a lack of economic growth in the north-east.

Mr. Gow: I have exciting news for the hon. Lady. Some of the houses which she says are presently empty will shortly become occupied. If there are unoccupied houses in her constituency and house prices in the south-east continue to rise dramatically, a growing number of employers and employees will realise the economic advantages of moving the area of their activities away from the south-east. That will happen.

Mr. Wilshire: It is already happening.

Mr. Gow: My hon. Friend does not disagree with me.

Mr. Churchill: We are already seeing clear evidence of that in Manchester and in the north-west of England. Employers and individuals are moving up from the south to where houses are affordable and jobs are available.

Mr. Gow: Of course, and in the case of my hon. Friend's constituency there is the added attraction of

having him as its Member of Parliament, which is an advantage not conferred upon the constituency of the hon. Member for Durham, North-West (Ms. Armstrong).
Although that is the case, and two of my hon. Friends have asserted that what I have predicted is already occurring, I must tell my right hon. Friend the Chief Secretary that there is another way—apart from the normal laws of the market—in which we can meet that demand. I still believe that we are too restrictive in our planning controls and that the amount of time taken between making an application for planning permission and the application being granted—especially where the appellant procedures have to be gone through—is too long.
I wish to move on from the question of house prices, which, I repeat, are not a cause for inflation, to a wider issue about inflation. I remind the House of what my right hon. Friend said in his Budget statement:
The medium-term financial strategy, now entering its ninth year, which continue to provide the framework for reducing the growth of money GDP, and hence inflation …These will be achieved by maintaining firm monetary discipline, buttressed by a prudent fiscal stance."—[Official Report, 15 March 1988; Vol. 129, c. 997.]
I am in wholehearted agreement with that statement of the Government's objectives and the way in which diminished inflation should be achieved, I find myself in respectful disagreement with my right hon. Friend's decision five months ago to reduce interest rates, and I find myself in respectful agreement with his decision, taken in the last six weeks, to increase interest rates on five separate occasions —each by 0·5 per cent. My right hon. Friend was right to say that this year there will be a repayment of debt. Zero Government borrowing and, a fortiori, a repayment of debt will bring downward pressure on inflation. The other weapon in the hands of the Chancellor is to maintain interest rates at such a level that monetary growth is contained.
When Parliament met in May 1979, the most important danger facing the economy was inflation. Today, it is perceived that that danger is there no longer. I cannot agree with those who are complacent about the prospects for inflation. If it was possible for the Government to reduce inflation from its 1979 level to its present level of 4 per cent., it is most certainly possible for the Government to bring inflation down to zero, which is the declared policy of the Chancellor and the Prime Minister. I hope that the Government will give a higher priority to the abatement of inflation and that my right hon. Friend the Financial Secretary will say in his reply that the Government's aim is to have stable prices—that is to say, zero inflation—by the end of this Parliament. Stable prices will be the surest guarantee of fuller employment and of faster economic growth in the long term. The condition both for fuller employment and for accelerating economic growth is stable prices. I hope that my right hon. Friend will recommit the Government to that.

Mr. John Battle: It is always a pleasure to follow the hon. Member for Eastbourne (Mr. Gow). I feel tempted to reflect that when all around him have gone he will remain standing as the last free marketeer. Having listened to the hon. Gentleman, many hon. Members will have gained the impression that the British people have been subjected to a great experiment, which has been


variously labelled in the past few years—sometimes as monetarism, sometimes as the social market economy and now, perhaps more plainly, as the tax-cutting Budget.
I believe that the Government are inviting the people of this country to worship at the altar of the free market on which stands the idol of the atavistic individual. The latest high priest of this ideology is a young assistant professor of economics at Harvard, Lawrence Lindsey, who is regularly referred to by the Chancellor of the Exchequer. He was a member of President Reagan's Council of Economic Advisers in 1983 and 1984. Some of us fear—probably even the Government do—that our economy lives in fear of the debt in the American economy, despite advice from such as Mr. Lindsey. Mr. Lindsey has been proclaimed as one of the gurus of the American supply side economists. He is a strong advocate of tax cuts to encourage the sort of social mobility that the Chief Secretary referred to today. Professor Lindsey argues that cuts in higher tax rates would come through in extra tax revenues to the national economy.
The Chancellor boasted in his Budget speech:
Throughout my time as Chancellor I have been on the lookout for taxes to abolish."—[Official Report, 15 March 1988; Vol. 129, c. 1003.]
He then went on to abolish two minor capital taxes on share transactions, which was a little piece of self-indulgence amounting to £100 million. Some of us will note that that was almost as much as the amount by which the Chancellor claimed he could not afford to increase child benefit this year. It is now rumoured that child benefit will be phased out altogether, but the Chancellor still boasts that he will abolish income tax altogether. How does the Budget's approach match the simple Lawrence Lindsey test? On 23 May the Financial Secretary said that if the tax regime for1988–89 was still the same as that which existed in 1978–79, some £20,000 million more would have been paid this year than under the current Budget's arrangements. In other words, the Budget markedly fails the simple Lawrence Lindsey test.
In a piece written for the Sunday Times of 20 March this year, Lindsey said:
In the estimates I did at the National Bureau of Economic Research, the 'supply-side' effect of the 1981 tax cuts probably added about 2·5 per cent. to America's GNP over the first five years they were in effect. That works out to about 0·5 per cent. per year, nobody's idea of a miracle.
Some, I am sure, would argue that the impact of 0·5 per cent. is so marginal that it could be interpreted as meaning Professor Lindsey does not know what the effects of the policy are. It would, as my hon. Friends have said, perhaps be much better for the Government to have a strategy on interest rates for individuals, companies and industry in order to get real growth in the economy, because Lindsey will prove to be a false prophet followed by a Government casting around for reinforcement of their preconceived ideas.
Of that £20,000 million reduction in tax liabilities, no less than 46 per cent.—that is £9,300 million—is now being enjoyed by the top 10 per cent. of taxpayers. Looked at from another angle, the top 1 per cent. of taxpayers have had their tax liabilities reduced by £22,680 each, whereas the bottom 50 per cent. have had reductions averaging £3·30 each. Some of the lowest income earners—as I know,

and as other hon. Members know from their advice surgeries—are paying more in tax now as a result of the operation of this Budget.
Lindsey went on to say:
Patience may be sorely tried
by the approach of his strategy.
Data will no doubt be produced showing that the measured income distribution has become less equal.
Of course it has. Data are emerging daily, through careful interrogation by our parliamentary questions, both of the Budget impact and of the operation of the social security system, which show that, while the very rich are getting richer, the poor are getting poorer. It is clear that for the most part pensioners, in particular, low-wage families and single homeless people are receiving less in social security than they were before 1 April of this year. If the Government had held, for example, to the previous method of pegging the basic pension level at the level of inflation, or the level of average earnings increase, whichever was the higher, a pensioner couple would now be getting £79·90 a week instead of the £69·50 that they receive under the present arrangement. To that has to be added the cuts that have taken place in housing benefit.
I was somewhat surprised to hear Government Members refer in Committee to statutory pension payments as "handouts" to pensioners. It is an insult to pensioners to suggest that they live on handouts, when they have worked all their lives, have paid in to the national insurance system and have a right to a decent income when they retire. Many Conservative Members did not seem to realise that all people receiving housing benefit have to pay 20 per cent. of their housing costs because of the statutory rate contribution that was imposed in April of this year, regardless of ability to pay.
I refer to the Government's admission on 27 May that families in Coventry earning between £60 and £120 a week, with two children, wound up between £5 and nearly £11 a week worse off as a result of this Budget. That was because, although the introduction of the new credit benefit was raising entitlement by some £10 to £13 a week over the previous system, that raising of the family credit was offset by the loss of free school meals and free milk. It amounted to just over £4 a week, and in some families there were cuts of between £15 and £16 a week. Those are not our figures. They were given in replies to questions put to the Minister.
It sometimes strikes us as absolutely astounding that the Prime Minister can come to the House at Question Time and say that everyone is participating in the prosperity of Britain, because we know that people have been pushed to the margins of our society and are not participating in that wealth. Some of the poor are getting much poorer. Claims by the Government, such as we have heard this evening, to have removed restraints to growth and given free rein to competition, and about the success of the privatisation programme, emerge as shibboleths at the altar of the free market. Under this Government's economic policies millions are now being excluded from the wealth that the Chancellor of the Exchequer proclaims.
In practice, the economic policies are fostering what some might describe as a social malignancy, the "loadsamoney" culture, in which the poor are priced out to the margins of our society, while the rich in the city centres get richer and richer. The people of this country, unlike, it seems, the Government, know that economic justice is at the heart of social growth and that people


ought to be at the core of the economy, not an arithmetical equation or the idol of the free market. That is why in the weeks and months to come this Budget will be clearly understood by the people for what it is. That is why the great experiment that has been tried once again in this Budget will, as my hon. Friends have said, eventually blow up in the Government's face.

Mr. David Wilshire: It is a happy coincidence that the hon. Member for Leeds, West (Mr. Battle) has tried to focus the attention of the House upon worshipping at the altar, because it is the theological overtones that opposition to this Bill has attracted that I want to refer to this evening.
Despite the fact that the Bill has 170 pages packed full of detail, it seems to me that its key issue is the principles that lie behind the tax reductions. These principles, I have no hesitation in saying, are absolutely right, despite all the nonsense that we hear from the Opposition Benches.

Mr. Battle: The hon. Member throws out the remark that it is nonsense coming from these Benches. Does he include in that the reference to his own Government Ministers' answers to our questions?

Mr. Wilshire: No. I am focusing on the criticism that I have heard here today, the criticism that I have heard before and, particularly, the criticism that has come from outside the House about a splendid Budget and a very splendid Bill.
All the criticism that I have heard, particularly from outside and particularly from the Labour party, is quite unjustified. I have tried to sort it in my mind and have come to the conclusion that the sources of criticism can be put into two groups. The first of these groups is the envious, bitter politicians, and the second is the "holier than thou" clerics. Sadly, as I try to sort out the distinction between these groups it becomes ever more blurred. The joint message that I increasingly hear seems to be something like this: that God has joined the Labour party and all Conservatives are now banished to the everlasting bonfire.
This Third Reading debate seems to me to be the ideal time to reaffirm the philosophy that underpins these proposals. It is not greed, as Opposition Members keep saying. Opposition Members would do the country a favour if they tried to learn these basic principles, because then they might be some good to the country.
The principles seem to me to be these: that wealth must be created before hon. Gentlemen can spend it or redistribute it; that the state cannot create that wealth—all it can do is provide the right climate for individuals to create it for themselves; and that capitalism is the best system yet devised for enabling individuals to create that wealth. This Bill is all about creating that right climate so that all of us may prosper.

Ms. Joyce Quin: Does the hon. Gentleman accept that there is an enormous amount of money available to the Government from their privatisation receipts, oil revenues and so on, that they could spend for the benefit of the country? Why do they refuse to spend it?

Mr. Wilshire: I was referring to the fact that it is individuals who create wealth. I want to discuss what

individuals should do with that wealth. They should not simply leave it to the Government to do things on their behalf. If we follow the principles and the Bill is accepted, we will all be better off. That will enable all of us to do more to help those less fortunate than ourselves.
What should we make of the joint criticism that the Bill has received, particularly the criticism from Socialist politicians and trendy clerics? Their approach is politically stupid.

Mr. Darling: Would the hon. Gentleman care to name the trendy clerics he is disparaging?

Mr. Wilshire: That is what I intend to do. I am grateful for being given an opportunity to do that.
The joint approach is politically stupid because Opposition Members and those who support them seem to have failed to learn the lesson from three election defeats. They have not managed to take on board the message of the current opinion polls.

Mr. Tony Worthington: May I remind the hon. Gentleman that he has not yet mentioned the trendy clerics?

Mr. Wilshire: That is a surprise that I shall spin out for a moment. I want to whet Opposition Members' appetites. —[Interruption.] It ill becomes Opposition Members to sleep. They were going to sleep before you arrived, Madam Deputy Speaker, when their Front Bench spokesman was making them nod off. Many of them are awake now because they are jumping up and down.
As I have said, the political lesson that the Opposition have failed to learn from their election defeats is that seeking to blame prosperity for social ills will get them nowhere.
Their theological approach is dangerous. It divides a dwindling Church and ignores chunks of the New Testament. All alert students of the utterances of those who advance theological reasons for rejecting the Bill and for opposing the Government will be aware of the trendy cleric to whom I wish to refer. If they have studied carefully, they will have noticed the recent outbursts from this year's Methodist conference. As a Methodist, I am saddened that our new president—bear in mind that our president occupies John Wesley's chair—has joined the growing band of trendy and misguided clerics who oppose the Bill.
In all conscience, if I describe somebody as "misguided", it is only right that I should justify that remark. I shall attempt to do that by using two quotations. The first is from a little tract given to me when I tackled that cleric on what he had said. It is entitled, "A Methodist view of capitalism in Britain today". It is written by the president, the Rev. Richard G. Jones. It says that capitalism
has no place for the poor, the weak, the sick, those who cannot work".
I quote that to make clear where the president of the Methodist conference stands as an individual. But where does the Methodist Church stand?
Methodism's distinctive contribution to Christianity is to be found in the first four volumes of John Wesley's sermons. Sermon No. 44, published in 1760, is entitled, "The proper use of money." By happy coincidence, that title could easily be the short title of the Finance (No. 2) Bill. The sermon says:


The right use of money-a subject largely spoken of, after their manner, by men of the world"—
politicians—
but not sufficiently considered by those whom God hath chosen out of the world"—
clerics.
These generally do not consider, as the importance of the subject requires, the use of this excellent talent. Neither do they understand how to employ it to the greatest advantage".
John Wesley goes on to say that the introduction of money
into the world is one admirable instance of the wise and gracious providence of God. It has, indeed, been the manner of poets, orators and philosophers"—
and, dare I add, the Labour party—
in almost all ages and nations, to rail at this" —

Mr. Darling: With respect, this sounds like the Monty Python guide to religion and the Budget. Will the hon. Gentleman say whether he is criticising the view taken by the president of the Methodist conference, who said that under the present system there is no place for the poor or the sick? Is he saying that that is wrong?

Mr. Wilshire: The quotation from John Wesley will show that one has to understand what money is and then understand how to use it.
John Wesley went on:
It has, indeed, been the manner of poets, orators and philosophers, in almost all ages and nations, to rail at this, as the grand corrupter of the world, the bane of virtue, the pest of human society …But is not all this"—
railing against money—
mere empty rant?
We have heard such rant from Opposition Members.
Is there any solid reason therein? By no means. For, let the world be as corrupt as it will, is gold or silver to blame?…The fault does not lie in the money, but in them that use it …It is, therefore, of the highest concern that all those who fear God know how to employ this valuable talent".

Ms. Armstrong: Will the hon. Gentleman give way?

Mr. Wilshire: I will give way to another Methodist with pleasure.

Ms. Armstrong: I suggest that the hon. Gentleman looks at last week's edition of The Methodist Recorder where he might see another interpretation of John Wesley's sermon. The hon. Gentleman says that he wishes to give the view of the Methodist Church. The view of the Methodist Church was expressed not just by the president but by the conference. There was one dissenter to that. I do not know whether the hon. Gentleman was at the debate, but the Methodist conference roundly condemned the Budget, not because it talked about money but because of the way in which it distributed and used that money. In that sense, the Methodist conference was totally in support of John Wesley in that money in itself is not evil; it is the way in which one chooses to use it. We and the Methodist conference want to see that used to support and protect the vulnerable first.

Mr. Wilshire: rose——

Mr. Speaker: Order. I have only just returned to the Chamber. This is the Third Reading of the Finance (No. 2) Bill and I suspect that what takes place at Methodist conferences may not be wholly relevant.

Mr. Wilshire: I am desperately sorry, Mr. Speaker, that you did not hear what came before. It is relevant. If you will bear with me, I have to make one final point. The creation of wealth is at the heart of the Bill. Only after creating wealth can one discuss what to do with it.
You are right, Mr. Speaker. I will not discuss the Methodist conference but I want to put on record what John Wesley said because it is at the heart of the Bill. He said:
It is, therefore, of the highest concern, that all who fear God know how to employ this valuable talent …And, perhaps, all the instructions which are necessary for this may be reduced to three plain rules.
The House should take on board those three rules. The first is, "Gain all you can." In other words, it is a good thing to be better off. Secondly, "Save all you can." Despite what we have heard from Opposition Members, investing is encouraged if we take note of that point. Thirdly, "Give all you can." That does not mean encouraging the state to tax people; it means that people should give what they can themselves.

Mr. Worthington: Would the hon. Member quarrel with the right hon. Member for Old Bexley and Sidcup (Mr. Heath), who referred to the "unacceptable face of capitalism"? Does the hon. Member think that he was being doctrinally unsound?

Mr. Wilshire: The difficulty is to get in touch with him to agree or disagree with him. When I see him here, it is usually in the opposite Lobby.
Having quoted John Wesley at length, with many interruptions, I conclude by saying that I think he would have approved of the Budget and would have been voting in the Aye Lobby tonight. Therefore, I urge all hon. Members to back the Bill because it will help all of us to make more money. [Laughter.] Opposition Members may laugh, but the point has to be understood that there is nothing to be ashamed of in making money.

Mr. Battle: Will the hon. Gentleman explain to the House, as he has so far failed to do in his jibes and slurs on the Methodist Church and his criticisms of the Budget, how a person whose income has been reduced as a result of the Budget and the changes in benefit can spend more money? The people have not got the money to spend because his Government have taken it away.

Mr. Wilshire: The Budget is about creating wealth. The Bill will do precisely that and will give opportunities for everyone, despite what Opposition Members say.

Mr. Alistair Burt: Does my hon. Friend agree that the anger among Opposition Members has arisen because they have not yet found out that the policies of the Government have created wealth for a growing majority of the people? That is why Labour Members sit on the Opposition Benches and we sit on the Government Benches. The Bill will continue that process. Opposition Members are angry because they are still getting it wrong.

Mr. Wilshire: I agree completely. I have always found, when I have been heckled, that it is because the hecklers do not like the argument and cannot think of anything else to say. They claim that the Bill is unjust and unfair. It is not. What would be unfair and unjust would be if individuals who benefited from the Bill turned their backs on those who need help. That represents the issues for the trendy clerics.
My final message is: let all of us in this House support the Bill and help to create more wealth. Then let the clerics in God's House teach all of us as individiuals how to use the wealth and how to help other people.

Mr. Tony Worthington: In considering the Budget, we should ask ourselves whether it corresponds to the needs that we see in our constituencies. Does it have relevance for the people whom we have the honour to represent? Does it make the choice of priorities that they would make, given the needs that they see around them? In my constituency I have not met anyone who feels that the Budget matches those needs.
Throughout the consideration of the Bill in Committee, we have been acutely conscious of living in one world and of Ministers living in a completely different world. In the world in which many of us have to live, a third of the population of Scotland in my region of Strathclyde are living at or below supplementary benefit level. That proportion is not diminishing; rather it is increasing.
In March 1988, 16·8 per cent. of the people in Strathclyde were unemployed. I am intrigued by the Government's calendar which refers to falling unemployment for the last 23 months. The interesting thing is that it ignores the previous 86 months for which the Government were in control. If we consider unemployment on a fair basis—taking it over the time that the Government have been in control—we note that unemployment in Scotland has gone from 165,000 to 296,000. The unemployment to vacancy ratio is still 20:1.
Since 1979 Strathclyde has lost 200,000 jobs, which is 20 per cent. of all jobs in the region. Strathclyde now employs 3·6 per cent. of the total of British people who are employed; in 1979 it employed 4·4 per cent. There has been a massive proportionate decrease. Since 1979 manufacturing employment in the region has fallen by 47 per cent. When we listen to the Government, it seems that the decline has been reversed, but in the year up to September 1987 a further 11,000 jobs were lost. On present trends the loss of jobs is likely to continue.

Mr. John Marshall: Despite the dreary noises, does the hon. Gentleman agree that disposable incomes in Scotland are much higher than in other regions, and are growing rapidly?

Mr. Worthington: I do not agree with that; I shall come to that later.
Large parts of the industrial north and Scotland are projected by the Cambridge Econometrics people to lose 85,000 more jobs by the year 2000. The Budget changes do not help. Poor people have lost money. [Interruption.]

Mr. Battle: On a point of order, Mr. Speaker. I have been here throughout the debate, often in the absence of Government Members who obviously were not prepared to defend their Budget. I am now finding it difficult to hear my hon. Friend's remarks because of the noise being made by the hon. Members who have just rushed into the Chamber.

Mr. Speaker: Order. I ask hon. Members not to have private conversations.

Mr. Worthington: I am grateful, Mr. Speaker.
The alleged tax cuts and the changes in social security benefit, as well as increases in rents and electricity charges

and the 20 per cent. minimum of rates which people have to pay, have affected incomes. In our surgeries we hear a catalogue of woe because of the problems caused by the Government's policies. In addition to all that, from next April people in Scotland will have to pay the poll tax. That means a transfer of resources from the poorer to the richer areas. Also, the uniform business rate is not to be introduced in Scotland until nearer the year 2000 than 1990. Again, in effect, that will lead to a transfer of resources from Scotland.
If one looks around, one has a picture of public squalor. One can see that the roads are inadequately repaired, public buildings are in poor condition and, above all, housing is visibly in disrepair. The reason is not mismanagement by the public sector; the work should be done by the private sector, but it is not being done.
There is a progressive lack of investment in Scotland. Conservative Members pointed out in Committee the growth of the venture capital industry. That is good to see, but, once again, most of that venture capital investment is in the south-east. Sixty per cent. of the growth in venture capital investment has been in the south-east, although it has only 47 per cent. of firms, whereas Scotland has only 6 per cent. of venture capital investment, although it has 12 per cent. of firms. In Scotland, we also have a banking system that is short-sighted about investment. The pattern in Scotland is that lending is done through overdrafts rather than through medium term loans. In the south-east the lending pattern is different.
We have a far from free market in which the Government are stoking up the south-east. It is interesting to note that the M25 was built at a cost of about £980 million, whereas the main road into Scotland, the A74, is not likely to attain motorway status until after the turn of the century.
It is interesting to consider the figures for the London docklands. The budget for the docklands for 1987–88 is £132 million, although the London docklands cover a small area. That budget dwarfs the combined budgets of the Scottish Development Agency and the Highlands and Islands Development Board. The Budget has a pattern, to which I am sure other Opposition Members will refer. The effect of the Budget is to leave more resources in the south than there are in the north and in Scotland.
We hoped that the Budget would help to resist the trend towards the centralisation of resources in the south-east. Is it the inexorable consequence of Government policies that we shall be living in two nations? Will not people in the north and Scotland have the right to live in the same country as those in the south-east? The Opposition believe that, if we are all members of a United Kingdom, there should be comparable standards throughout. The inevitable consequence of Government policies is that people will be paid less and less in the north and Scotland, and more and more in the south. The standard of services in the north and in Scotland will progressively decline.
The Government must recognise the importance of manufacturing industry. We must have long-term investment. The Government have an antipathy to manufacturing industry that is difficult to understand. In Scotland, 23 per cent. of employment is in manufacturing. We are led to believe that more and more employment will be in the service industry. In two countries, manufacturing industry's share of employment is not 23 per cent., as it is in Scotland, but 29 or 30 per cent. They are not Third


world or backward countries; they are Japan and West Germany, which have more jobs in manufacturing industry than we have in Scotland.
We must accept that much of the apparent movement from manufacturing to the service industries is illusory. Jobs that used to be done in-house in manufacturing industry are now being done out of house in the service industries—in banking, marketing and so on. There has been a transfer of jobs from inside jobs to outside firms.
We must realise that manufacturing industry will not play a declining role in future. At the very least its role will remain as it is and it is likely to increase. Service industries' overwhelming purpose is to serve the needs of manufacturing industry. The Government's lack of interest in the needs of Scotland and manufacturing industry—quite apart from the immorality of their taxation policies—is the fundamental weakness of their Budget.

Motion made, and Question proposed, That the debate be now adjourned.—[Mr. Kenneth Clarke.]

Orders of the Day — Rover Group

The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke): I think it will be for the convenience of the House if I make a statement about the Rover Group.
Yesterday I informed the House that the European Commission had decided the outline terms governing the state aid for the proposed British Aerospace acquisition of the Government's shareholding in Rover Group. I also explained that BAe had asked for more time to consider the implications of other conditions attached to the Commission's decision.
I should make it clear that the points of difficulty for BAe were not related to the basic financial framework of the deal, which was acceptable in principle to BAe and which has not changed since yesterday. The issue was the commercial flexibility available to BAe in complying with the Commission's decision.
I am, however, glad to report that talks with the Commission this morning have clarified the position in terms satisfactory to the BAe board.
As I informed the House yesterday, the Commission has approved the final terms of the acquisition after certain changes in the structure and scale of the March agreement. In making this judgment, the Commission has recognised the important implications for competition and restructuring in the European vehicles market through the return of Rover Group to the private sector. It has also taken note of the prospects for the development of the company, on the basis of Rover Group's management's plans which BAe has endorsed.
Under the revised arrangements it has been agreed that some residual items of trading debt should remain on the balance sheet. The revised terms also take account of the continuing improvement in Rover Group's financial performance since the talks with BAe were launched. I am sure that the House will have welcomed the improvement in the half-year results that Rover Group announced yesterday. These showed a profit before interest of £28·8 million compared with a loss of £10 million for the same period last year.
On this basis, BAe will still pay £150 million for the Government's shareholding in Rover Group. The precise timing of the payment will follow the clarification of certain tax matters arising out of the change of ownership of the company. The Government, BAe and the Commission have also agreed a new cash injection of £547 million comprising £469 million in recognition of historic debt; and £78 million to support part of Rover Group's investment programme in the assisted areas.
In addition, we have agreed material changes to the tax provisions of the March agreement. There has been no change in the provision that only £500 million of Rover's existing trading losses will be available after it has been acquired by British Aerospace, but we have agreed to remove two other tax restrictions that were in the earlier agreement. They will give the British Aerospace group the same freedom that any other company has under tax law to utilise about £200 million of Rover Group's capital losses and up to about £300 million of disclaimed capital allowances. Estimating the value of those tax benefits is a matter for British Aerospace, although clearly they are very significant.
I pay tribute to the contribution made by Graham Day, his management team and his work force, whose skills and hard work have permitted the return of 18 Rover Group businesses to private ownership since May 1986. They have raised the performance of Rover Group to the point where it can now look forward with confidence at its final return to the disciplines of the market place, as part of one of Europe's major engineering groups.
I am certain that the Rover Group's return to the private sector will prove to be in the best interests of the company, its employees and dealers—as well as of the many thousands of others in its supplying industries whose livelihoods depend upon the Rover Group's health. The deal also means that, subject only to approval at an extraordinary general meeting of British Aerospace, we shall have returned to the private sector the last of the constituent parts of what was British Leyland.

Mr. Bryan Gould: Is it not clear that Ministers have spent the last 27 hours trying not so much to safeguard the British car industry as to salvage what they can from the mess they have created? Is it not equally clear that they have failed miserably in that attempt? Have Ministers so far conceded control over their own policy that to overcome a problem that the Chancellor of the Duchy himself described only yesterday as not being "especially important or material" they have had to return cap in hand to Brussels to beg for concessions?
Is it not a further humiliation that the response to that request was to send Ministers packing with a flea in their ear? Will the Chancellor of the Duchy confirm the Commission's statement today that it has not changed its position in any way?
How is it that an unelected official can tell the Secretary of State for Trade and Industry that his terms are non-negotiable? How is it that the Commission can dictate to the British Government on the details of Rover's corporate plan when the House of Commons is kept in the dark? Does that new corporate plan mean, at the EEC's behest, the virtual end of British-controlled car manufacture? What was the point at issue that was supposedly trivial but which caused so much concern to British Aerospace and which was so non-negotiable for the Commission?
How is it that British Aerospace has now accepted £250 million less than Ministers initially offered? As I asked yesterday, why was it left to the EEC to negotiate that reduction in the spending of taxpayers' money? What reliance can he placed on a deal in which British Aerospace manifestly has so little confidence, and which manifestly carries with it so little commitment to the British car industry? If it has taken Professor Roland Smith 27 hours to have his arm twisted, how long will it take him to persuade his institutional shareholders to accept the deal? Is it true that institutional shareholders have already been telephoning to express their objections?
May we be given a guarantee that, if the shareholders throw out the deal, there will be no hawking round of Rover to any buyer—whether British or, more likely, foreign—who can be found, and that we will have no more of these embarrassing nonsenses in the name of an unnecessary and unwelcome privatisation?

Mr. Clarke: I appreciate that the hon. Member for Dagenham (Mr. Gould) has had to guess to a certain extent about the way in which my right hon. and noble

Friend and myself have spent the last 27 hours. Having heard his opening questions, I may say that his guesswork is miles wide of the truth. Over the past 27 hours, we have been clarifying certain of the procedural conditions which the Commission attached to its decision and which were communicated to British Aerospace yesterday morning. The Commission has not changed the nature of its agreement with either the Government or British Aerospace: nobody asked it to do so. As I said yesterday, the British Government were agreed, and we did not return to the Commission asking for any change.
British Aerospace, quite rightly, wished to go over the terms and written conditions it received yesterday and to clarify certain points. In particular, British Aerospace wished to reassure itself that it would retain commercial flexibility in the management of its business. I am glad to say that, as a result of the exchanges between the Commission and British Aerospace, in which the Government played a helpful part, BAe is now satisfied, from the explanations it has received, that it will have the necessary commercial freedom that any responsible management would want in running a business.
That is what caused what I described yesterday—as it has turned out, accurately—as a "last-minute hitch" It did not grow, it has been removed, and with clarification we can now proceed.
Rover Group's management plans have not been changed at any stage in that process. They were not changed by the Commission, and they were not changed by British Aerospace. They have been accepted by British Aerospace. Of course we have not disclosed those plans to the House. We have not disclosed them publicly because there must be commercial confidentiality about the management plans of a business of that kind. To disclose Rover Group's corporate and management plans would be of huge advantage to its foreign and domestic competitors. It would have been quite wrong to reveal them. It was wrong to do so when the group was nationalised, and it would be wrong to do so now that it is to be privatised.
As to changes in the deal, the deal must be looked at as a whole. As I said, its scale and structure have been changed. It is true that the cash injection has been reduced by about £250 million. At the same time, there have been changes made to the tax losses available to British Aerospace. On the other hand, we have removed the ring fencing from the capital losses and the unclaimed capital allowances, so that they can now be used against the business of British Aerospace as a whole. Therefore, the agreement structure has been changed.
Certain factors have mainly influenced that change, apart from the Commission's perfectly legitimate desire to ensure that state aids were not being given to Rover Group on a basis that gave it an unfair competitive advantage over its competitors, which is a policy we support. Inevitably, we entered into discussions with the Commission knowing that it was likely to make changes. It has always done so in the past. It did so in the case of Leyland-DAF last year and in respect of Renault earlier this year. Also—this should be very welcome—Rover Group's own performance and our expectations of the debt at the date of completion were changing as our discussions proceeded, and we have just had its excellent results.
I believe that the agreement is certainly one that we can endorse. It is extremely welcome. The hon. Member for


Dagenham spoke about what the shareholders may decide at the extraordinary general meeting. That is the next and last step, but the British Aerospace board will commend the agreement to the company's shareholders, and my guess is that the shareholders will take more notice of the British Aerospace board than they will of the hon. Gentleman and his hon. Friends, who have merely been trying to wreck this whole arrangement from the moment that it started.

Several Hon. Members: rose——

Mr. Speaker: Order. I remind the House that this is an interruption of a very important debate. I ask for single questions.

Mr. Michael Grylls: Does my right hon. and learned Friend agree that this excellent news is the result of the Government's good stewardship in looking after Rover Group during the past few years, and of the high standard of the group's present management? The House, if it is sensible, ought to welcome the group's move back into the private sector, particularly into a firm such as British Aerospace, with its wide spread of engineering and high-tech skills. The Rover Group has a real chance of prospering and of doing better and better, as we surely all hope it will do.

Mr. Clarke: I agree with my hon. Friend. He is right to congratulate the group's management. This is almost a historic occasion. My hon. Friend and I have been Members of the House for the same period. It is an amazing thought that we are on the threshold of seeing Rover Group ceasing to be a politicised company and returning to an ordinary commercial basis, and to having a management planning for its future free from the constraints of the public sector and of vast losses. It is a significant landmark in the recovery of the British economy. It is most symbolic of the way in which the British economy generally is reviving.

Mr. Ron Leighton: In view of this amazing episode, will the Chancellor of the Duchy of Lancaster tell us who is running the country and whether the British Government have any say in it? Is he aware that it looks at though Commissioner Sutherland has much more influence over these matters than he does as a Minister of the Crown? Who elected Commissioner Sutherland, and by what democratic method can we remove him? Are we to assume that the next time the Minister stands at the Dispatch Box to give a statement on British Government industrial policy he will have to say, "But of course, as we are just a county council in the Common Market, this all depends on whether I am overruled by my superiors in Brussels"?

Mr. Clarke: The policy of the European Community is that state aids, to use the European phrase—in other words, subsidies to industry—should be regulated to ensure that member Governments do not start subsidising against each other to preserve loss-making industries and excess capacity. That is not in the long-term interests of the European Community and its economy. The British Government wholly support that aim.
I believe that it is desirable to have a market within the European Community in which the Governments do not

subsidise their respective client companies against one another. Where a degree of state aid is justified, it is right that someone should police it. That is what has happened on this occasion. The British Government not only accept that policy, but we do not have any difficulties with the Commission about it, as the satisfactory resolution of this issue has demonstrated.
If we ever, heaven save us, have a Labour Government again, I am glad to say that the policy of the Community would stop them returning to a system of indiscriminate state subsidies to nationalised industries and propping up the fantastic losses that Rover Group began to incur in the days of bad stewardship in the 1970s.

Mr. Cranley Onslow: Is my right hon. and learned Friend aware that, despite the Opposition's carping attitude, there will be few people in the country who will not heartily welcome the satisfactory outcome of the negotiations? Few people will not join in wishing all possible success to everyone involved—the management and work force of Rover and British Aerospace—and will not thoroughly condemn the stupid, frivolous, irresponsible and superficial attitude of the Opposition Front Bench.

Mr. Clarke: I entirely agree with my right hon. Friend's description of the Opposition as "carping". There have been moments in the confused history of the Opposition's approach to this matter when they brought temporary cheer to those with the interests of Fiat, Volkswagen, Renault and other car companies in mind. I am sure that they have, unintentionally, given considerable encouragement to Rover's rivals. A successful deal is a much better outcome for our company.

Mr. Robin Corbett: Can the Minister give watertight assurances to the House that British Aerospace has accepted and will implement Rover's investment programme? What guarantees and assurances did he seek on future employment within Rover and what were given?

Mr. Clarke: As I said in my statement, British Aerospace has accepted and endorsed Rover's management plans. In common with every other management, British Aerospace retains the right to be flexible in applying those plans, as it must. That was the point that we were discussing. British Aerospace sought clarification to ensure that it was free to respond to market conditions and that it has the same flexibility that any management requires as things evolve. As of now, British Aerospace accepts and endorses the management plan of Rover Group, and when it acquires the business it will proceed on that basis.

Sir Hal Miller: Does my right hon. and learned Friend agree that all this kerfuffle over the dashing, once again, of the Opposition's hopes that the deal would fail should not be allowed to obscure the fact that, with improved quality and improved management, and given the tremendous manufacturing cost advantage and the success of this Government's policies, Britain is once more the place to make cars? That is why the deal will succeed.

Mr. Clarke: I agree with my hon. Friend; and I am sure that he agrees with me that the last hopes of the Opposition were dashed by the good results of the past six


months. The Opposition would have got the position that they would have preferred only if Rover had plunged back into loss and the deal had been frustrated.

Mr. Alex Salmond: Given the two new tax breaks, can the Minister estimate just how much British Aerospace will be given to take on the Rover Group? Will Rover Group have to pay the Government £150 million, or will the Government deduct that from the money that they will give to British Aerospace?

Mr. Clarke: The tax losses and the unclaimed tax allowances are of value to British Aerospace, but, as I have already said, only the company can calculate that and it can do so only when it has made progress in assessing the capital gains that it will use against the capital losses and it has got the necessary clearance from the Inland Revenue for the tax arrangements that it proposes. Once that has been sorted out, the company will pay £150 million in consideration of the Government's shareholding.

Mr. Kenneth Warren: Although I appreciate that Mr. Sutherland was doing the job for which he is empowered, does my right hon. and learned Friend consider that the time has come to decide whether the fact that the commissioners have such power should be brought to the attention of the Council of Ministers?
As we move towards 1992 we must ensure that the restructuring that industry in Europe believes is necessary is carried out more efficiently than it has been in the past several months. Does not my right hon. Friend find it amazing that, given all the union support, no Opposition Members support the proposal?

Mr. Clarke: I frequently encounter Commissioner Sutherland at Council of Ministers meetings and, among other things, we discuss state aids. There is no difference between Commissioner Sutherland and myself about those aids. At the moment I have joined with other Ministers to encourage Mr. Sutherland to take a careful look at the Italian proposals for state aids to their steel industry. We support the commissioner in his declared intention to take a firm view of that matter and to ensure that the Italians comply with the rules.

Mr. Nigel Spearing: Despite what the hon. Member for Hastings and Rye (Mr. Warren) has just said, does the Minister agree that Commissioner Sutherland was acting entirely within the rules and entirely within the constraints of the treaty of Rome? Surely his reply to my hon. Friend the Member for Newham, North-East (Mr. Leighton) demonstrates that, in this respect and in many others, a future House of Commons and a future Labour Government would be politically constrained by that treaty. If, as the Minister has claimed, the Government were aware of the constraints, why did they not produce a deal that could have got through the loops instead of being caught on the barbed wire?

Mr. Clarke: Unlike the hon. Gentleman, I am a supporter of Britain's membership of the European Community and a supporter of the economic regime within the Community. I have already said that I am a supporter of the policy of state aids which the Commissioner has applied. I should have thought that the whole point of my statement today was to make it clear that my right hon. and noble Friend has conducted negotiations with the result that we have got through the

loops and have complied with Community policy to reach a conclusion that is wholly satisfactory to the Commission, to the British Government and to the board of British Aerospace.

Mr. Charles Wardle: Apart from the commercial flexibility considerations to which my right hon. and learned Friend has alluded, should not any responsible board of directors who have put their name to an offer document and then had the terms of that document revised sit down and work out the profit and cash flow implications of the changes? Is that not the very least that their shareholders and employees would expect of them?

Mr. Clarke: British Aerospace has done that throughout its contemplation of and discussions about the purchase of the Rover Group. It was happy with the financial agreement which emerged and which my right hon. and noble Friend had been discussing with it while discussing the agreement with the Commission.
Yesterday, British Aerospace got written terms from the Commission setting out the procedures that the Commission would follow, but British Aerospace wanted more time to consider them and to receive certain clarifications. It has now got those clarifications and it is going ahead. British Aerospace has told us that it will now commend the deal for its commercial and financial common sense to its shareholders at the extraordinary general meeting.

Mr. Peter Snape: Was the European Commission right when it referred in its statement yesterday to
The planned move by Rover from mass car producer to specialist producer"?
If it was, is such a move a matter for celebration by the Conservative party? What employment problems are likely to arise from such a move? What are the implications of it for those in the west midlands engaged in the car accessory business who depend upon the Rover Group for their future survival?

Mr. Clarke: There is a certain amount of semantics involved in this, but Mr. Graham Day has said publicly on a number of occasions that Rover Group is not a volume car producer—[HON. MEMBERS: "Why?"]—because it represents 3 per cent. of the European car market. Rover's existing management plans have throughout been accepted by British Aerospace and endorsed. That is the basis on which we are starting.

Mr. Phillip Oppenheim: Surely it should not surprise anyone that the party whose mega-merger industrial policy created the lumbering British Leyland giant in the first place, whose economic policies riddled it with inflation and whose labour policies crippled it with strikes should look so glum today and fall back on its anti-EEC instincts in compensation for the fact that this deal will go through?

Mr. Clarke: I shall not seek to rival my hon. Friend's language, but I wholly agree with his sentiments.

Dr. John Reid: Will the Minister confirm his astounding statement in reply to the hon. Member for Banff and Buchan (Mr. Salmond) that the Government do not know the valuation to be put on the new tax allowances which will be worked out only later by


the company? Is it not astounding for the Minister to tell the House that he does not know how much extra taxpayers' money has been ploughed into the deal? Can he tell us the difference between a £250 million subsidy and a £250 million tax allowance? If he can, I promise that nobody on this side of the House will tell the EEC.

Mr. Clarke: We know what is available to Rover Group by way of tax losses which it can use. The trading losses of £500 million remain unchanged and we have capped those. Rover has more trading losses on its books now, and they will be available for use against future Rover Group profits. In the March agreement, the capital losses and unclaimed capital allowances were ring-fenced and could be used only against capital gains in the Rover business. We have removed that ring fence so that they can now be used in British Aerospace as a whole, as lawfully as for any other company. [Interruption.] With respect to the hon. Member for Dagenham (Mr. Gould), who disputes that, it is entirely lawful to do that with capital losses and unclaimed capital allowances. Exactly how much use British Aerospace can make of that will depend on its decisions about capital gains and tax computations. It will need section 768 clearance from the Inland Revenue and then it will know the value and will pay the consideration for the share.

Mr. Andrew Smith: We all want to see the Rover Group succeed in or out of British Aerospace. Given how crucial to that success the corporate plan and the restructuring to which the Minister referred are, is he not hiding behind his claim of commercial confidentiality? Could he not at least tell us whether it is intended that the numbers employed will increase or decrease? Can he tell us whether part of the Cowley site, as has been widely reported, is scheduled to be sold under the plan? Is it not wholly unacceptable that the workers and communities most affected are being kept in the dark about precisely what this means for jobs and the viability of the industry?

Mr. Clarke: This is an old issue and I am sure that this exchange has taken place in the House many times before. The Government do not disclose the corporate plan or the management plans of the Rover Group because they are commercial and are valuable to competitors. I believe that the House has accepted that and, if not, it should. There is no more reason to disclose the management plans to competitors now than there was when it was a nationalised corporation. I understand the hon. Gentleman's concerns about these matters, which are legitimately shared by many of his constituents. I believe that his constituents and the unions that represent them welcome this deal.

Mr. Roger King: Is my right hon. and learned Friend aware that tonight he and our right hon. and noble Friend the Secretary of State will be the toast of thousands of working people within the Rover Group factories in Birmingham, Solihull and Coventry who look forward to working with British Aerospace to provide the wealth and fill the jobs, which are increasing month by month and will provide them with a high and successful standard of living? I am sure that they extend their thanks.

Mr. Clarke: We do not normally have toasts on the Floor of the House, but I shall propose one in return to the management and work force of the Rover Group who have done so much to get us to where we are today.

Mr. Dave Nellist: Is the Minister aware that his statement—I notice from a copy that it was the third draft—will not bring any joy to British Aerospace workers or to car workers in the midlands? When he spoke of Rover following the other 18 privatised former Leyland businesses, is he aware that not only have Coventry Climax, Self-Changing Gears and Alvis savagely reduced jobs, but that last week the jewel in his crown, Jaguar, froze all recruitment and started cutting jobs through what it euphemistically calls "natural wastage" because of the decline in the American market and currency changes, both of which I warned the Minister about in the House before?
Will the Chancellor answer the question about yesterday's press release from Commissioner Sutherland's office which speaks of the danger of over-capacity in car production in Europe and states:
The planned move by Rover from mass car producer to specialist producer will reduce the danger of aid being used to expand capacity"?
Does not that mean that the sword of Damocles will hang over the jobs at Longbridge, about which Uriah Heep has just spoken, and those at Cowley, about which my hon. Friend the Member for Oxford, East (Mr. Smith) spoke?

Mr. Clarke: The commissioner was anxious to ensure that none of the 12 Governments used subsidies to expand capacity at a time when, in his judgment, there was surplus capacity. The hon. Gentleman talks about employment in various companies. Employment in manufacturing, as in the service industries, depends on success in the market place and on making products which can sell. That is the case for all the companies that he cited, and it will continue to be the case for British Aerospace, Rover Group and other great firms. The Government's approach to these matters has been hugely successful in creating employment, as this morning's unemployment figures have again confirmed. The hon. Gentleman is wrong in believing that the Government can fix the numbers of people employed in particular plants making particular products. That is an absurd approach to industrial policy.

Mr. Robin Maxwell-Hyslop: Is my right hon. and learned Friend aware that, when the all-party Select Committee on Trade and Industry looked at the initial nationalisation of British Leyland, the problems of the Rootes Group, the Chrysler rescue operation and others, it always regarded the corporate plan of the companies as essentially commercially confidential and that it would have destroyed the future that the Committee was trying to preserve had they been revealed? Will he stress that the taxation arrangements that he announced today are not making extra deviations from normal tax law, but bringing the provisions more nearly into parallel with normal tax law?

Mr. Clarke: My hon. Friend is a senior and experienced Member and I am grateful to him for endorsing my belief about the confidentiality of corporate plans. I do not believe that any Select Committee would ever wish to expose those to the public eye. They never have and never will. Rover Group has suffered greatly from being drawn into the political arena, but fortunately it has never


suffered the blow of seeing its management plans trailed over the Floor of the House of Commons, and I trust that it never will.
My hon. Friend is right that in March we put a ring fence around the capital losses and allowances so that ordinary law did not apply and British Aerospace could not have used them in its business as a whole. We have removed that ring fence so that the ordinary law applies to this new group on the capital tax position, just as it would for any other acquisition.

Several Hon. Members: rose——

Mr. Speaker: Order. We are in the middle of an important debate. I shall allow questions to continue until a quarter to eight and then we must move on.

Mr. Matthew Taylor: Has it not taken the Commission to expose the Government's golden give-away terms, not only in this but in every privatisation, and their fly-boy attitude to public investment? Has it not taken the Commission also to expose the Government's lack of willingness to take on board competition policy in reality and to approach both privatisation issues and industry in general with a determination to serve the public's best interests rather than investors?

Mr. Clarke: We had all this yesterday. I have explained the basis upon which the discussions went on and how the agreement that we have arrived at was reached. if I follow the hon. Gentleman, I take it that he supports the Commission's terms and the agreement that we have entered into. So do I, so do the Government, so does British Aerospace—so there should be nothing between us.

Mr. Quentin Davies: Does my right hon. and learned Friend agree that it is astonishingly naive of the hon. Member for Dagenham (Mr. Gould) and some of his hon. Friends not to realise that it would be inconceivable That a major and complex corporate deal of this kind could be put together without a great deal of delicate and cliff-hanging negotiation? Does he agree that their attitude to these matters reflects their most profound inexperience? Does he accept that there will be widespread admiration, not only in the two companies concerned but throughout British industry, for the able way in which he and the Secretary of State have conducted the negotiations on behalf of the Government, and that an expanding and thriving British Aerospace will be a fine monument to their achievements in the future?

Mr. Clarke: I agree with my hon. Friend to the extent that I hope that Opposition Members will go over the agreement and how we reached it, so that in the unlikely event of any of them having to deal with the European Commission in matters of this sort they will have a slightly better understanding of how these affairs are conducted than they did in March or yesterday.

Mr. Dennis Skinner: Is the Minister aware that it would strike someone outside this place that what has happened in the course of these 24 hours was that he has been unable to convince people in the Common Market about the straight subsidy? The Common Market almost certainly then told him to cover it up and get in touch with chartered accountants, who would fiddle the tax and provide the same sort of money in that way. Why cannot that be done for taxpayers in Britain so that they

can have the ring fence removed from around them and set up tax liabilities against other assets? Is it not significant that this matter is being discussed on the day of the Third Reading of the Finance (No. 2) Bill, when £2 billion is being handed out to top taxpayers—and here the Minister comes along with another big tax fiddle'?

Mr. Clarke: I have already explained this. As I said yesterday, we were in complete agreement with the commissioner. The Government did not go back to the Commission and ask to have any of the terms changed. For the Government and the Commission, nothing has changed since yesterday morning. Quite correctly, British Aerospace wanted clarification of a text that it saw only yesterday morning about the procedures and conditions that the Commission was applying. In discussions on that, the Government played an intermediary role. The board is now satisfied, and that is where we are now.
I have tried with some care to explain the tax position. It bears no relation to what the hon. Gentleman said. The company is being governed by the same law and tax rules as apply to any other private company in this country.

Mr. James Hill: I congratulate my right hon. and learned Friend on his statement. Is he as surprised as I am that, although he has announced a successful conclusion, the Opposition are giving it exactly the same response as if he had succeeded in finding a failure for them? Surely the Opposition realise that competition policy has existed for years. It has been criticised because other countries have not obeyed the rules, as we do. I hope that, in future, subsidies for all nations that belong to the European Parliament will be scrutinised in the Council of Ministers and subjected to the same media exposure as this case has been.

Mr. Clarke: As a Member of the European Parliament and of the House, my hon. Friend has always supported competition policy, and we have consistently taken this view about subsidies in the EEC over the years. We are, as I said yesterday, equally firm in insisting that the Commission applies the same agreed regime to other countries. We are usually amongst the most vehement in requesting the Commission to uphold its duty and make sure that others apply only legitimate state aids to business.

Mr. Tam Dalyell: The Minister will riot have had time to bring himself up to date yet with the Bathgate position, as he promised to do yesterday, but will he say something about the £78 million, which is to
support part of Rover Group's investment programme in the assisted areas"?
How is the sum of £469 million of historic debt arrived at?

Mr. Clarke: The £78 million is regional selective assistance given on the same criteria as we always apply to regional selective assistance for any other company. The assistance goes towards some of the investment plans of the Rover Group under its management plans. It will help to support and maintain jobs in the west midlands that now have assisted-area status.

Mr. Dalyell: What about Bathgate?

Mr. Clarke: To the best of my knowledge and belief, it has nothing to do with Bathgate. I will write to the hon.


Gentleman if there is any mistake about that. It is regional selective assistance for investment in the continuing business of Rover Group.
As for debt, we have agreed to allow the historic trading debts to be removed from the books of the company, except that £100 million-worth of historic debt is now to remain on the books. That has led to a change in the deal since we announced it in March. Apart from that, a vehicle stock provision was made in the books of the company which we previously regarded as debt, but the Commission regards as working capital, so it has been taken out of the original March agreement. There have been other minor changes, but those two were the big ones— £100 million historic debt remaining on the books, and vehicle stock provision, which is no longer to be written off by the Government.

Mr. Robert Hayward: My right hon. and learned Friend has removed a large element of uncertainty hanging over British Aerospace and Rover Group. Can he reconfirm that these negotiations have in no way affected any negotiations between the Government and British Aerospace on the Airbus programme?

Mr. Clarke: I can. Our arrangements in the Department of Trade and Industry have helped with that. My right hon. and noble Friend conducts all day-to-day business on the Rover Group and I conduct all day-to-day business on Airbus.
I hate to use the expression "Chinese walls", but there are certain Chinese walls between the discussions, and my right hon. and noble Friend and I regularly discuss the position on both fronts. One thing that has emerged all the way through is that there is no connection between this

arrangement for Rover Group and the launch aid that the Government have given to Airbus, on which our position is given and perfectly clear.

Mr. Bob Cryer: Will the Minister confirm that this rather shabby conspiracy has resulted in £2·9 billion-worth of taxpayers' money going to British Aerospace—plus £1 billion in cash and capital allowances? Does he agree that British Aerospace will receive in return £750 million-worth of physical assets for £150 million? Would not most people regard that as barefaced robbery of the taxpayer? Why cannot the taxpayer be given the benefit of this developing company, whose results the Minister has mentioned? Does the right hon. and learned Gentleman accept that there will be enormous pressure from the workers and the labour movement to get this company back into public ownership, where it belongs?

Mr. Clarke: What the hon. Gentleman describes as a conspiracy is an agreement to return Rover Group to the private sector where it belongs and where, in our opinion, it will flourish. It is a wholly suitable end to our exchanges tonight, if this be the end of them, that a Labour Member should sound as thought he is urging his hon. Friends on the Opposition Front Bench to renationalise the company——

Mr. Cryer: Yes, I am.

Mr. Clarke: Looking back over the history of the nationalised British Leyland, which has cost the British taxpayer £2·9 billion, I am astonished to see the unreconstructed end of the Labour party still demanding its renationalisation. What I have announced today promises a very much better future for the company, its work force, its dealers and everyone associated with it.
I beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.

Orders of the Day — Finance (No. 2) Bill

Question again proposed, That the Bill be now read the Third time.

Ms. Joyce Quin: Throughout our debates on the Budget and on the Finance Bill—including the Committee stage— the Government and their supporters have steadfastly refused to accept the truth of their Budget measures: that they represent huge benefits for the rich and create an almost unbridgeable chasm between rich and poor.
In Committee, Conservative Members claimed that only Labour had criticised the Budget for its handouts to the very rich. That is absolute nonsense. Let me quote one or two of the headlines that greeted the Budget when it was first presented to the House:
Dramatic gains for the rich.
An end to old-fashioned egalitarianism.
A gain for high earners with little to offset it.
Those are from the Financial Times.
Super-rich net big bonus from tax changes.
Low earners lose out from tax reform.
Those are from The Guardian.Virtually throughout our press—which is not normally hostile to the Conservative Government—similar headlines showed us how the Budget was received.
Organisations concerned with the plight of the poorest sections of the country—organisations such as Shelter, Age Concern, the Low Pay Unit and many charities and welfare organisations—expressed their utter dismay at what the Budget contained.
In a rather strange speech, the hon. Member for Spelthorne (Mr. Wilshire) enlisted the aid of John Wesley in support of the Budget and the Bill. Apart from thinking that it is a dubious practice to try to enlist the aid of someone who has been dead for a great many years and to quote him as being in favour of a particular Bill or clause when he is not in a position to make his views known, I believe that what the hon. Gentleman said was far from being the view of most Methodists and most Church people in today's society. It was foolish of him to single out a particular cleric when it was clear from the recent Methodist conference that the views of that cleric were supported by nearly all the delegates. A motion passed virtually unanimously condemned the divisive nature of the Government's economic policies. That was not the view of one person alone; it represented a wide spread of opinion.
We must also recognise that the Methodist Church is in the same camp on these issues as the Church of England, and indeed the Roman Catholics, particularly the Catholic bishops, who made very similar statements. They are taking that view not because they have suddenly become party political or because they all want to join a particular political party, but because they see the reality of Government policies in their parishes and in all parts of the country where they have a presence. It is the reality of the poverty that has been created in the Government's period of office that is giving rise to such widespread sentiments of concern.
Some elements of the business community have also criticised the Budget and the Bill. My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) pointed out in an earlier intervention that the CBI in the northern region had tremendous misgivings

about the Budget because of the regional effect of the measures, which, it was felt—particularly in view of the extension of the business expansion scheme to private housing—would benefit the south-east more than the north-east. Moreover, the top earners tend to be concentrated in the south-east, and it was therefore felt that the money coming from tax cuts would circulate in the already prosperous parts of the country rather than in the areas that most need a cash injection.
Several myths have appeared during our discussions in Committee and on the Floor of the House. One is the myth of the low-tax society that the Government claim to be creating. With the shift towards indirect taxation, many people find that they are paying more in tax overall, although the richest are paying up to 40 per cent. less. The head of the Low Pay Unit calculated that today's super-taxpayers were the poor rather than the rich, given the way in which the Budget measures and the allied social security measures have combined.
An article in the Financial Times of 4 May contrasts the circumstances of two similar couples:
Income tax and national insurance for a married couple on 10 times the average earnings and with a part-time working spouse and no children counted for 61·1 per cent. of earnings in 1978–79, compared with 36·9 per cent. in the current financial year. For the same type of household on half the average earnings, the tax burden this year will be higher than in 1979.
That is a disgraceful situation. It is figures like that that the Government cannot avoid when they try to soft-soap us into believing that everyone has benefited substantially from the Budget. My hon. Friend the Member for Dunfermline, East (Mr. Brown) was told in answer to a question that more than 7·5 million households were worse off under the Budget measures and the social security changes combined.
Another myth, propounded yet again by the Chief Secretary this evening, is that the Budget is a Budget for incentives. The only incentive created in this Budget is the incentive to import. The cuts in income tax and the lack of investment in manufacturing industry mean that the likely gainers from the tax cuts will be those producing goods in other countries which will be imported into Britain in ever-increasing numbers. As we know, the recent trade figures bear that out. This is a fear that we have expressed throughout our debates —a fear that we have expressed for a long time, given the Government's economic strategy —and it certainly seems to accord with the present reality.
Looking at our present tax system, we must face many unpleasant facts. It is still possible for someone earning £1 million to pay no tax. The top 1 per cent. will pay £4·7 billion—in other words, an average of £22,680 per taxpayer less this year than under the Labour Government. Yet, at the same time as the rich have received these enormous benefits, pensioners, because of the broken link between pensions, wages and prices, are earning less than they would have been if the link had been maintained. The pensioner married couple would now be earning about £79 instead of £69. Many people have seen their standard of living plummet, as I know from my constituency and from parts of Tyneside where poverty has become visible in a way that it was not 10 years ago.
The Chief Secretary has made great play tonight of the improvement in employment figures. We must realise, however, that under the present Government unemployment was at a record level, and that any improvement that there has been represents an improvement of a dire


position. Unemployment is still far higher than when Labour was in office. The Chief Secretary's claims struck a very hollow note with me, because this week in my constituency we have faced the loss of 450 highly qualified technological jobs in Marconi Radar, which has more than wiped out any meagre employment gains in Gateshead in recent months.
I want to make that point very loudly. Conservative Members simply do not realise that substantial redundancies are still taking place in the manufacturing sector —redundancies which, in an area such as the north-east, we can ill afford. These are real jobs, which it will be extremely difficult to replace in anything approaching the near future.
The effects of the Government's measures on the economy as a whole, as well as on specific regions, are also very worrying. The balance of payments has deteriorated dramatically. Some measures have promoted rapid growth in credit, on which we had a good debate yesterday when many valid points were made. The investment that we need for our country and for the future is still in very short supply. Investment is still below the levels of the last Labour Government. It is not just Opposition Members who say that. Organisations such as the Institution of Civil Engineers and British Aggregate Construction Materials Industries consistently claim in evidence to the Treasury and Civil Service Select Committee that public capital investment is the poor relation in the Government's economic strategy.
The right hon. Member for Shropshire, North (Mr. Biffen) said that Budgets often look different after 24 hours. The judgment on this Budget was harsh as soon as it was announced, but the judgment should be even harsher now, particularly from those who have had the opportunity of scrutinising its grisly details throughout the long sittings in Committee. It is a disgraceful Bill, and the blatant way in which the wealthy have been showered with benefits shows a deep contempt for society as a whole.

Mr. James Arbuthnot: It is a pleasure to follow the hon. Member for Gateshead, East (Ms. Quin) because, however much one may disagree with what she says, she always puts it with a care and persuasiveness that I find rather enviable.
This year, there is one Finance Bill; last year, there were two Finance Bills. What this year lacks in quantity, it makes up for in quality. Last year, with some diffidence, I made my maiden speech on the Third Reading of the second Finance Bill on 20 July.

Mr. Andrew Mitchell: It was a very good one.

Mr. Arbuthnot: In that speech I asked for three changes to be considered; first, a change in the taxation of married women, which I regarded as an archaic and insulting antique; secondly, a change in capital gains tax legislation, which was absurdly complicated; and, thirdly, a change in the way in which our tax system relates—or rather, does not—to our benefits system. I am delighted to say that, within less than a year, the Government have changed the taxation of women, they have dealt partly with the

taxation of capital gains, and I am sure that they will shortly begin to consider changing the way in which the tax system relates to the benefits system.
The change in married women's taxation is one of the most historic changes of this century, because it begins to treat women as equals. The Government have brought in equality of treatment for women, yet at every step of the way they have been vigorously opposed by Opposition Members, who talk about equality for women, but whenever the scent of equality for women is within their nostrils they run a mile. I am therefore truly grateful to the Government for the change in the taxation of women. 
The Government have made a start on the taxation of capital gains. I describe it only as a start, but it is a major start, as it brings the taxation of capital gains closer to the taxation of income by virtually amalgamating the two, although there is still plenty of work to be done. There is much legislation which is now unnecessary, or could at least be simplified, which discourages people from converting capital gains into income, or income into capital gains, to reduce their tax rates. That could perhaps be achieved by abolishing capital gains tax altogether and introducing a new schedule to the Income Tax Acts so that capital gains could be taxed under schedule F. That would necessitate suitable changes to the allowances, and the indexation allowance, which I regard as too complicated to be worth while, might have to be abolished. However, if the Government are serious about abolishing inflation, as I am sure they are, the indexation allowance should become less and less important.
The issue of national insurance is related to the tax and benefit systems and needs consideration. Before the Budget there were rumours that if my right hon. Friend the Chancellor of the Exchequer reduced the higher rates of income tax he would claw back that relief from higher rate taxpayers by increasing the national insurance rates that they would pay. I am delighted that he did not do that, mainly because national insurance is such an abomination. I should like to see it abolished altogether. It is the equivalent of another income tax, but it requires its own bureaucracy. It has the most curious marginal rates of tax, which are sometimes over 100 per cent. It is a con for people who contribute towards their pensions. They contribute towards their pensions in the belief that they are building up a pension fund for themselves in future, when we know that national insurance contributions are spent on today's pensions. If anyone other than the Government tried that sort of thing he would be arrested, and quite rightly too. National insurance no longer has any place in our taxation system. It should be amalgamated with the income tax system, and we would not lose by doing that.
National insurance brings in about £28 billion a year, so it would be the act of a brave man to say that it would cost nothing to abolish it. The Budget is based on the idea that if we reduce taxation we encourage incentives, we encourage people not to go abroad, we encourage tax exiles abroad to come home and we encourage employment prospects. If we reduce taxation, we can increase the tax take. It would cost far less than £28 billion to abolish national insurance. That is not considered in this year's Finance Bill and will probably not be considered in the next year's Bill, and possibly not even in the following year's Bill, but at some time I should like the Government to consider not only the possibility of reducing income tax to 20 per cent., but also the possibility of abolishing national insurance.

Mr. Nigel Griffiths: When the Government announced the Budget, they— boasted that is something that they are rather good at —that it was the most generous Budget this century. Few people believed it then— even the Daily Mail and the Daily Express recorded some criticism—and fewer people believe it now. They know that the Government's generosity has been selectively targeted on the rich to an extent unknown in living memory.
It is the rich, not the rest, who make major gains from the capital gains exemptions, who benefit primarily from inheritance tax changes and who enjoy the tax-free gains from the business expansion scheme and other Government tax relief schemes. The poor, and those people on low and modest incomes, saw any tiny gains from the Budget swallowed by gas and electricity prices rises, by rent rises, which were three times the rate of inflation, and by soaring mortgage interest rates.
Many poor people fared even worse than that, including elderly people who have lost housing benefit, handicapped people who have forfeited allowances for heating, laundry and baths, and disabled people who are no longer able to afford diets, let alone home comforts. Those people have viewed the Budget with horror.
My hon. Friends have rightly pointed out many of the inequities that lie within the Budget. There is, however, another element that is a cause for great concern. My constituents and I fear the proliferation of private landlords. People are greatly troubled by the likely effects of the business expansion scheme, details of which are to be found in schedule 4. They are worried that more flats in Marchment will be bought up and let to tenants who have no vested interest in the well-being of the area. They are fearful that unscrupulous methods will be employed to remove current tenants. They are anxious about the Government's failure to impose a social landlords' charter with real safeguards for tenants from landlords who are running establishments that have been set up under the BES.
In Edinburgh and elsewhere we have seen too much use of public money for private landlords. The Conservative-controlled council gave property speculators over £6 million in repair grants. Private property was converted into executive flats for visiting business men. Five years have passed and the flats are still empty. Edinburgh's Labour-controlled council has stopped the grants, but the Government are changing the law and speculative landlords will have a new lease of life. The BES will allow those who enjoy large incomes to offset £15,000 a year or more, and to pay little if any tax on property developments that come within the scheme.
In that way, £40 million of public money this year will go to those investing in housing for rent. Such housing will not be subject to the Rent Acts and there will be no security of tenure for tenants. There will be no obligation on investors to maintain the property for rent at the end of five years. Indeed, there will be an incentive for such investors to get out of it and enjoy capital gains tax exemption from the profit that is made when the property is sold. The BES will give a green light to the Nicholas van Hoogstratens of this world. The Evening Standard tells us that thug factors in property development will enable investors to double their money in five years.
The Financial Secretary to the Treasury was forced to concede in Committee that nothing in the Budget and nothing in the BES will stop van Hoogstraten from cashing in on the cash bonanza that the BES will open. This is in spite of his criminal record of evicting young families in winter, harassing senior citizens to obtain vacant possession, cutting off gas, electricity and heating supplies and creating explosions to get rid of sitting tenants. Companies, including those which operate under van Hoogstraten, will receive an open-ended subsidy of £200 million over the lifespan of the scheme.
If the Budget was designed to help the homeless and if it was aimed at providing rented housing for the elderly and the handicapped, that money would have been made available to housing associations and local authorities. Instead, the Government have chosen to target it on the undeserving rich. Instead of putting the £200 million to the provision of 5,000 houses for the elderly, the handicapped, the overcrowded and the homeless, Budget money is going to those who clearly have a much higher priority in the mind of the Government—those who have large incomes and who want to make a killing out of the housing misery of thousands of the poorly housed.
This debate takes place after the general public have seen the impact of the Budget on their pay packets. The majority have seen any benefits offset by rises in living costs as a result of the Government's policy. We stand by all the figures that have been quoted by my hon. Friend the Member for Dunfermline, East (Mr. Brown), the shadow Chief Secretary to the Treasury. He argued the case against the Budget so powerfully, piled up the evidence so convincingly, damned the Government with their own figures so forcefully and presented his arguments with such effectiveness that, apart from a limp intervention from the Chief Secretary, no Conservative Member dared to rise during his speech to challenge his figures or the crushing logic of the Labour party's argument.
After nine years of Conservative Government, participant after participant in the debate has voiced concern and alarm at the divided Britain that successive Budgets have brought about. We have the divides of north and south and the rich against the rest. The Government have been warned by the Churches, the charities and even by their own supporters, in addition to the Opposition, of the consequences. The Budget continues the corrosive influence that the Government have sought to impose on our society, an influence that will continue for yet another year. The Chancellor of the Exchequer and other Ministers boast that they intend to continue to allow the corrosion to take place and to bring in more measures that will divide Britain to a greater extent than ever before. For these reasons, we reject the logic of this year's Budget and of future Budgets to be introduced by the Government.

Mr. Andrew Mitchell: I do not wish to detain the House overlong, but I do wish to make six brief points. Before I do so, I wish to say how much I enjoyed serving as a member of the Committee that considered the Finance Bill. I found it a worthwhile and interesting experience. Much of the debate in Committee was more constructive than some of the debate to which we have listened tonight. It seemed that there was rather more common ground in Committee than has come across so far this evening.
For example, there was common ground on the advantages of fiscal neutrality and on the taxation of women. There was plenty of cross-party agreement on the removal of perks. There was even a glimmer of agreement on the heavy price that countries with high taxation regimes are paying for pursuing that policy.
In that contest, I pay my respects to the Opposition Front-Bench team for its handling of the Bill. I am disappointed that the hon. Member for Islington, South and Finsbury (Mr. Smith) is not in his place. I have been busy moving house within his constituency today and I look forward to receiving his letter of welcome.
It would be churlish not to mention the hon. Member for Newcastle upon Tyne, East (Mr. Brown), who enlivened our discussions with his wit and originality— unfortunately, not usually simultaneously. Each and every one of my hon. Friends returned to the Committee with a lighter step after the dinner break when we knew that the hon. Gentleman would be filling the post-prandial slot.
There is no doubt that we have before us a radical Bill. When we come to examine it in future, it will not he the removal of higher rates of tax that will ensure its longevity and create attention. It will be the integration of taxation of capital and income that will achieve that. That is the road down which we have started to progress, and that will be the hallmark by which the Bill is remembered. It is a key change that will have many beneficial effects. Apart from enhancing the drive towards fiscal neutrality, it will powerfully undermine the avoidance industry. It will ensure that lawyers and accountants do something rather more constructive with their time than working out extremely complicated and ingenious schemes for the very rich. It has the great merit of enhancing simplicity. It dismantles various artificial arrangements dictated by the perception of tax advantage rather than that of an open market view.
The pattern of many past Finance Acts has been to tinker with and change existing arrangements, but the Bill is a major departure from that tradition. Many of the ground rules have been changed. Perhaps that will lead to a couple of years during which highly technical measures will be introduced once the Inland Revenue has had a chance to analyse the effects of the Bill, but I hope that the Government will continue down the path that they have set.
The Budget's approach leads logically to the further integration of the taxation of capital and income and the further elimination of the differences in treatment that now apply. I hope that my right hon. Friend the Chancellor of the Exchequer will bear that closely in mind.
The second main quality of the Budget is the abolition of the higher rate of tax. Despite what Opposition Members have said this evening, that move will be seen in future to be entirely right. We have gone through an era of high taxation regimes throughout the world, and it has now ended. It is interesting to listen to what Ministers of the New Zealand and Australian Governments say when they visit Britain. The New Zealand Minister with responsibilities for trade and his colleague the Finance Minister have visited us, and it is interesting to hear what Socialists who are in power have to say about high taxation.
With the coming of 1992 it will be difficult for any one country in Europe, without massively disadvantaging its industry and commerce, to have a high taxation regime if other countries do not choose such a regime. We can no longer ignore the taxation regimes of other countries in Europe. They have a fundamental effect on whether we can attract industry and business, which is critical to our competitiveness.

Mr. Calum Macdonald: Did the hon. Gentleman see the report in The Guardian on Monday about a study undertaken by Professor David Birch of Massachusetts Institute of Technology of the various states and districts of the United States? He found that those with high tax regimes have fast-growing economies and low unemployment. He explains that by saying that low tax regimes frequently have a lower level of services and infrastructure. I should point out that Professor Birch is not merely an academic passing an opinion, but is an entrepreneur in his own right, having a firm called Cognetics, which now contains information about 12 million businesses across the United States.

Mr. Mitchell: I must confess that I missed that article in The Guardian on Monday. Although I have not seen the evidence that the hon. Gentleman cited—I try to avoid many articles written by American economists because I find them so difficult to understand—it flies in the face of most other economic evidence that is published in our great newspapers regularly.

Mr. Battle: If the hon. Gentleman had been in the Chamber earlier he would have heard some Opposition Members referring to the adviser who is often cited by the Chancellor—Lawrence Lindsey—who suggested that by cutting taxes a greater proportion of income would go to the Government of whatever country adopted that strategy. Answers to questions that we have put to the Government have shown that strategy to be false. By adopting a policy of low taxation, the Government will lose money. However, the hon. Gentleman missed the evidence because he was not in the Chamber when it was presented.

Mr. Mitchell: I was fortunate enough to hear much of the hon. Gentleman's speech. However, I do not accept his interpretation of that evidence. We are now all familiar with the effect of that policy. The hon. Gentleman has misinterpreted the parliamentary answer that he was given and has therefore drawn an erroneous conclusion.
I believe that the lowering of the top rates of tax will mean a tremendous increase in revenue for the future. Many now accept that it is fair to pay a top rate of 40 per cent. I have always believed that it is immoral in a free society for the state to take away more than 50 per cent. of what someone earns, and I continue to hold strongly to that view.
My third point relates to the taxation of women. I think all hon. Members agree that this has been a running sore for years and deeply insulting to women. For years we have been saying that something must be done. Now someone has done something, and all hon. Members should give credit to the Government for producing an economy that is sufficiently strong and productive to pay for such an important and long-overdue concession to women.
However, one of the significant side effects of this measure has not been sufficiently well advertised, and that is the downward effect on taxation paid by old folk and women. There are 900,000 women over 65 who will benefit from that one change in the Budget, and 1·5 million married women of all ages will pay less tax. Nearly all of those—1·2 million—have an income of less than £5,000 a year. There are 160,000 elderly couples who will cease to pay tax altogether, and 130,000 elderly men will qualify for age allowance. Those are substantial spin-offs to the benefit of the least well-off in society that result from this important measure.
My fourth point relates to the simplification of taxation of employees' shares in non-approved schemes. I fully understand the Inland Revenue's anxiety that there used to be room for abuse by employees being remunerated for tax reasons, by converting their income into shares. That was clearly wrong, and clearly an abuse, but with the increasing integration of capital gains tax and income tax, could not more of that anti-avoidance legislation be swept away? I hope that my right hon. Friend the Chancellor of the Exchequer will look carefully at that next year.
It is important to encourage the spread of employee share ownership. We can now do that within a framework where people pay tax regardless of whether it is on income or capital. I hope that we shall continue such charges, which move us more closely towards a share-owning democracy. Anything that encourages employee share ownership, or any other form of share ownership, must be welcome. I was delighted to see in an answer to my question—unfortunately, it was not reached at Question Time today—that, according to the latest Treasury estimates, Britain now has 9 million shareholders—three times as many as in 1979. The Bill simplifies employee share taxation and earns additional praise for that.

Mr. Battle: The hon. Gentleman waxes lyrical on the value of share ownership, but one method of share ownership is co-operative share ownership in the co-operative movement. Only yesterday on Report the Opposition moved an amendment to give relief to co-operatives to enable share ownership ventures to prosper. I wonder why the hon. Gentleman did not support that.

Mr. Mitchell: Not for the first time this evening, the hon. Gentleman is taking what I am saying out of context. I do not intend to be drawn down that path. Instead, let me move to my fifth point, which concerns company residence and migration rules.
As we are major exporters of capital overseas, it is important for the Inland Reveue to be able to tax profit earned overseas, but it is equally important to encourage other countries to operate sensible, pragmatic and liberal tax regimes. We must be careful to maintain a balance, which is why I particularly welcome the changes made on Report.
My final point relates to our discussions in Committee on the business expansion scheme. I was substantially reassured by what my right hon. Friend the Financial Secretary had to say on that. However, I hope that he will keep in mind two points for the future. First, in order to encourage those businesses that the Government most want to help, particularly in the manufacturing industry, it may be helpful to review the £500,000 limit next year. Not all manufacturing industries are now started in a garage

under an arch. Some require extensive capital and the business expansion scheme may have an important role to play in that, which needs to be continually assessed.
Secondly, the business expansion scheme attracts very favourable tax treatment. One receives a tax break on one's way into the scheme and on the way out through not paying any capital gains tax. This is now a mature scheme and we should look carefully at whether we need that sort of web of tax reliefs to sustain it and ensure that it continues to benefit those parts of the economy that we particularly wish to support.
I want to end by enthusiastically commending the Bill. It addresses the needs of our economy. It is a bold and confident measure and as such it is entirely in keeping with the best traditions of this Government. It deserves the support of the House this evening.

Ms. Hilary Armstrong: I enjoyed listening to the hon. Member for Gedling (Mr. Mitchell), but I was disappointed with his conclusion. I remember when he contested a constituency near mine. He did not win it, and I hoped that he had learnt something of the problems of a divided country with a divided economy which works in one part of the country but at the expense of other parts. That is essentially what we are trying to address.
I am also disappointed that the hon. Member for Spelthorne (Mr. Wilshire) is not present. I shall not pursue the issues that he raised, but it is naive to believe that giving money to a particular group of people who, whatever Conservative Members were saying earlier, are located in one area to which they are greatly committed, will encourage them to move. Far from leaving the south-east to invest in other parts of the country, they are frightened to leave it. I have discussed that recently with industrialists. Such people feel that if they leave the south-east they will never be able to afford to return. Such problems have been created by the divisions in the economy and by the Government's continuing refusal to deal with them. That is one of the central issues of economic recovery.
It is strange that we were lectured about the changes in unemployment. It is as if the Government simply do not know what is going on. The figures published this morning purport to show a dramatic drop in unemployment, but that has happened in the same week as we have had, I think, 1,500 redundancies forecast for the northern region. A report in The Guardian—and, I think, The Independent—showed that during the past five years there has not been a growth of jobs in the top half of the country. The way that the Government have changed their method of calculating unemployment figures means that in many areas unemployment appears to be dropping, but hundreds of people in my constituency, who are not yet 60, have been written off the unemployment register, and they, and the Government, have accepted that they will never work again.
The Government cannot get away for ever with saying that we have a booming economy, that things are going well, and that as long as we keep doing what we are doing everything will be all right. When I meet people at weekends in my constituency they do not know whether to laugh or cry. They feel that they have been written off by


the Government, because what is happening to them is not reflected in the words and sentiments of the Government. That is the essence of what we are talking about today.
Of course, we can talk about who is doing well. There are people in industries and companies in Britain who are doing well, but others are not. We are paying for the prosperity and upward movement that some people are achieving. Such is the unfairness that it is almost as if the Government are telling people that it is all their fault—that, if they are not doing well, it is because they are not entrepreneurial, because they are not behaving in a particular way, and that really anybody who is anybody is doing well. At the same time, the Government have cut and undermined the basic opportunities of many of those people to do anything about their circumstances and they now find it increasingly difficult to hang on, let alone to prosper.
I ask the Government not to dismiss those people. They have as many democratic rights as anyone else. They have the right to be taken seriously and to have their feelings and circumstances taken into account just as much as anybody else. It is irresponsible of Conservative Members to talk as if they and their plight do not exist.
The tragic thing is that the Budget has fuelled the divisions in society. The divisions have become greater during the past 10 years, and the number of people who are living in what is called poverty has increased, as has the number of children. The Government are fuelling problems for the future.
Another division is that between regions. What has the north received from this Budget? It does not have a preponderance of people who are in the top I per cent. of earners, although some have obviously gained. If we forget about individual gains and losses and think about the economy and how the regions are doing overall, we find that this Budget has fuelled the economy in the south-east. The right hon. Member for Shropshire, North (Mr. Biffen) talked about the dangers of an overheated economy in the south-east. The Budget has fuelled that because the preponderance of people who have benefited from the Budget live, work and have their operations in the south-east. The preponderance of people in the north are dependent upon other forms of Government aid—through benefits.
Overall, there has been a cut in Government funding, which will not lead to an economy that can invest, develop and produce a manufacturing and skill base in the northern region. Even if Conservative Members can get away with the argument—which no one has yet managed to do—that giving the richest people additional money will encourage them to invest, the experience of the past few years is that they are not investing in those areas of the economy which desperately need investment. They are not investing in manufacturing, in research and development, in training or in the north—not compared with the amount that is going into the south-east. That leads to all sorts of problems.
In the past, in the House, I have welcomed the principle that women should be taxed independently. I agree with the hon. Member for Gedling that in this day and age we should not expect anyone to disagree with that principle. I do not welcome all the proposals, because, ultimately, they do not give women the independence that they should

get. The Bill gives the husband the pickings and the wife the left-overs, and even that happens only if the husband gives his written permission. As I said in Committee, I do not see that as a great step forward. The Chancellor had the opportunity to do a lot more, and he conned us.
We have been urged to bring our taxation system into line with other European countries. For the taxation of women, that may have been a good idea. Other European countries have far more generous child benefit systems. The amount of money that women have lost by the freezing of child benefit is far greater than the Government are allowing them to receive through the independent taxation allowance. Some 85 per cent. of the money going to older women through independent taxation has been lost in housing benefit cuts.
Principles are fine, but they must be built upon with practical measures. The result of the Budget is that most women will lose. Most women are not going to benefit financially from this Budget because other measures have undercut anything that they might have gained financially. Even after all the rhetoric that we had from the Chief Secretary earlier, women will still have to get the written permission of their husbands.
I am very saddened by this Budget. I do not want to live in a society that punishes one group in order to reward another. It is very difficult to get all this right, but to justify a situation in which one group will prosper at the expense of another—not just to do it ideologically, but to justify it —seems to me to be quite absurd.
I hope that the Government will look again at their economic policy. I am interested in people prospering in a country that gives everyone an opportunity to prosper. I know, and the country knows, that this Budget will not make that possible. I shall therefore be voting against it tonight.

Miss Ann Widdecombe: I am grateful for the opportunity to speak in this debate. In the many hours that we spent in Committee on the Bill, the thing that caused me most disappointment was the lukewarm nature of the welcome given by the Opposition to what I consider to be the most important and long-overdue measure in this Budget—the final recognition of women as having equal financial rights and being equal earners in our society, with the rights which earning men have had for centuries.
The situation that pertained before the Budget went back 180 years, when not only a woman's income but the woman herself was regarded as the property of her husband. The hon. Member for Durham, North-West (Ms. Armstrong), who I would have expected to welcome the new measure, said that under the new system the husband had the pickings and the wife had the left-overs. She neglected to mention that prior to these changes not only did the wife not even have the left-overs, but the plate belonged to her husband as well.
It is right for us to realise not only the financial but the social importance of independent taxation and what it has done for women. I believe that in years to come, long after we have forgotten to argue about the other fiscal measures in this Budget and the Opposition's argument that somehow it is damaging to give tax concessions to high earners, we shall remember this Budget for its social


impact and what it has done for women. That is why I find the niggardly, grudging welcome from the Opposition so disappointing.
I listened very carefully to discover why the Opposition were not welcoming this great social measure. The reason appeared to be based largely on the fact that it was somehow going to benefit disproportionately the better-off, that being the standard response of the Opposition to any new and imaginative measure. They seemed to imply that there should be a sliding scale of equal rights between the sexes and that the better off one is, the less entitled one is, as a woman, to equal rights. The logic of the Opposition's argument is that this is not to be welcomed because the better-off might be disproportionately benefited. But the well-off woman is just as entitled to her independence and dignity as her less-well-off sister.

Mr. Battle: Will the hon. Lady assure us that she would apply that to child benefit? When members of her own party suggest that wealthy women ought not to receive child benefit, will she say that they have the right to have that money for their children?

Miss Widdecombe: The sheer inconsistency of the Opposition's reasoning is summed up in that contribution. In discussing the rates of taxes that people pay and the benefits that they receive, one obviously looks, may look, or may decide not to look at income. But what is never negated are the equal social rights of each category. It was the social right to independent taxation, to privacy and to be responsible for the tax on one's own earnings that I was upholding straight across the income scale. That is totally different from saying what we might or might not take into account when assessing entitlement to benefit.
When the Opposition had exhausted that avenue of argument, they said that it was a very good thing as far as it went but it did not go far enough, because of the transferability of allowances. They homed in on that and said that it completely negated everything else that had been done. But we had a very clear explanation and assurance given to us that, if we tried to reach a position in which we could have complete choice and division of allowances without transferability, it would not be until substantially in the future, if at all. Surely it is better to make a very real benefit which has not existed before, and transferability has not existed before. It is nonsense to say that it does not improve the lot of women. Of course it does. It may not improve it down to the last two inches of the road along which we would like to go, but it does improve it along the major part of the road. I believe that the argument that it does not go far enough does not negate the substantial advantages to women.

Ms. Armstrong: Our argument in Committee was that, if the Government had simply turned things round—if, instead of the man having to give his permission, it had been the other way round—that would have been seen by women as a real gesture. We recognise that it will take time to get the whole of this right, but we were looking for something that would demonstrate recognition of the problems that women have. Very often husbands have not declared, and we are fearful that they will continue not to declare, what they are earning, and so on. Had the Government done it the other way round, that would have been a real measure and would have been just as easy to carry out as the one that they are proposing in the Bill.

Miss Widdecombe: In other words, there should be over-correction, according to the hon. Lady. If there cannot be equal choice, choice should be moved to the woman instead of to the man. I believe in equal rights for the two sexes, and the man should have equal rights with the woman. For years men have been responsible for their wives' taxation, including taxation on the income of a wife who may be earning substantially more than her husband. In my view, the hon. Lady's suggestion would be just as iniquitous as the woman not being independently taxed in her own right. I see no point in over-correction. If we cannot get it exactly equal, it may be administratively convenient to stay with the sort of system that we have been having, but with an added right included.
Nobody can deny that that right has been given. Two enormous advantages have been given to women in this Budget. One is the right to independent taxation, and the second is the right to transferability, even though it may not be given in the way that Opposition Members would like.
The Budget has been an enormous boost for the family. The two biggest disincentives to marriage were the lack of independent taxation for women and the inequitable position with regard to mortgage interest tax relief for unmarried couples. Those disincentives have disappeared at a stroke. Therefore, apart from the financial benefits of the Budget, it is socially one of the most important reforming Budgets this century—certainly the most reforming in recent years. The only reason why Opposition Members are not enthusiastic is that they had the same opportunity but they did nothing about it. It ill becomes them to judge us.

Mr. Calum Macdonald: I shall keep my remarks as brief as possible in order to allow those who served on the Committee to take part in the debate. That is only right after the many hours spent on the Bill in Committee. I understand that it was a record number of hours in the post-war period. Every time I picked up a newspaper and read reports about what was happening in the Committee they tended to be dominated by my hon. Friends. They seemed to occupy centre space, and I congratulate them on that. The Chief Secretary admitted that when he referred to the Opposition as masters of the press release. That suggests rather sour and hurt feelings.
There has been a general shift in perception since the Budget was first given in the House. At that time my right hon. Friend the shadow Chancellor, the right hon. and learned Member for Monklands, East (Mr. Smith), described it as a "Budget too far". In the intervening months we have seen a growing public perception that that is so. More and more people are beginning to recognise that in this instance the Opposition have won the argument.
The Chief Secretary referred to the Budget as "monumental". It is monumental, but for the reasons I have just given, not for the reasons about which he was thinking. In the lead-up to the Budget statement it was expected that it would crown Tory rule and anoint the supposed benefits of years of Tory rule in the Exchequer. That was the frenzy of pre-publicity.
When the Budget was unveiled in the House, I remember the excitement of Conservative Back Benchers as each successive tax reduction was announced. Almost


immediately, public perception turned sour and began to recognise the unfair and unequal values contained in the Budget. The argument has been slipping away from the Government.
I understand that that would cause some frustration and bewilderment to the Government. After all, they could have expected much greater political kudos from the Budget. How could they have failed? It contains the same old formula of massive tax cuts. They expected popularity as an immediate aftermath.
The Opposition's arguments have rightly focused attention on the inequities in the Budget, as described so clearly by the shadow Chief Secretary, my hon. Friend the Member for Dunfermline, East (Mr. Brown). No matter what the propaganda mounted by the Conservatives, the Budget is now widely seen, certainly in my constituency and probably throughout the country, to be unfair.
The political benefits that the Government expected from the tax cuts, particularly the cut in the basic rate, have been lost because of the profile assumed by the cut in the top rate of tax. That is what people see as unfair. It is particularly unfair when it is compared with the persistent underfunding of the Health Service and the outrageous cuts in social security. Such comparisons have brought home to people the unfairness of the Budget. We see similar unfairness in the smallest details of the Budget. For example, extra money is given to wealthy people who inherit more wealth. That can be compared with the cuts in housing benefit where people who have managed to accumulate savings are being penalised for having done so. The comparison is striking.
It is no wonder that we have seen the Chancellor's reputation dim somewhat over the intervening months. At one time he was the hero of the hour, but now there is talk of resignation and disenchantment and people are asking what he will do now.
Even if the Budget was not popular, the Government might have expected other accolades for it. We have heard some claims tonight. There are claims that it is a radical Budget. In the lead-up to the Budget, the talk was of the virtues of simplicity and neutrality in the tax regime. As people have scrutinised the Budget, they have begun to see how shallow those claims were. The first claim to come under the microscope was that for the independent taxation of women. As my hon. Friend the Member for Durham, North-West (Ms. Armstrong) pointed out, that measure is skin deep when compared to the large claims made for it.
As we look at the Budget in greater detail we see that the claim about its being a move towards a simple and neutral tax regime is shallow. The Budget is far from being neutral or simple. It is biased towards the rich and is loaded with loopholes, exemptions and allowances. As my hon. Friends have pointed out, a millionaire, if he takes advantage of those exemptions and allowances, could get away with paying next to no tax.
The tattered reputation of the Budget as a radical measure has been summed up in a succession of headlines in the financial newspapers. I cite only one. About a month ago, the Financial Times talked about the fading zeal for tax reform on the Government side. That was entirely appropriate.
Bit by bit the Chancellor was losing the argument. It was no longer the popular, vote-winning Budget it was first expected to be. When exposed to scrutiny, it was not the radical Budget that it was trumpeted to be. The emperor may not have been entirely without clothes, but he was getting down to his jockstrap—his ability to manage the economy. The idea has been disproved that the Budget represented the fruits of the Chancellor's careful and prudent management of the economy over the years and that it was an example of his financially sound approach to the economy. Just after the Budget, it seemed that the Chancellor was reinforcing his reputation. The iron Chancellor was becoming the quicksilver Chancellor, able to out-guess, out-manoeuvre and out-finesse the financial markets.
Then the pound rose above levels previously thought to be unsustainable. Interest rates began to climb. The CBI began to squeal about the effects of interest rates. In the past few weeks we have seen mounting evidence that we will have a shocking balance of payments deficit at the end of the year. Such a deficit was unforeseen by the Government. They still have not been able to explain it away. Already it is £4·7 billion more than the figure estimated at the time of the Budget and almost twice the figure that was put about by the Government at the end of last year.
Is this the transformation of Britain into the high-performance enterprise economy that the Chief Secretary talked about? The problem is not one of excessive growth. Our growth is lower than that of Japan, the United States or Germany. It is not a question of sucking in imports. The key problem is stagnating exports. The Government's prediction that exports would grow has already been shown to be false. That is the surest sign of the decay of the economy.
On the point made by the hon. Member for Gedling (Mr. Mitchell) about benefits accruing from a low tax regime, I refer him to a study of 12 million businesses in the United States by Professor David Birch of the Massachusetts Institute of Technology. A newspaper article on his study says:
American states and districts which have high tax regimes are the ones whose economies are now growing fast, with significant business and job creation.… Dr. Birch said areas which had low taxes often also had a low level of services and a poor environment.
The hon. Member for Gedling said that that flew in the face of the evidence which he had received. We have been looking for proper studies to bear out the claim that the move towards a low tax regime was designed to stimulate growth. We have not found any such studies. None has been advanced. All the studies that have been cited tend to disprove it.
One of the main boasts of the Government is that they have balanced the books and moved into surplus. The Chief Secretary made that point. But at what cost has that happened? It has been at the cost of a reduction in services, and at the cost of undermining and underinvesting in the infrastructure that is desperately required if the economy is to have a sound future. It has also been at the cost of reduced assistance for the poorest.
One of the first actions of the Government was to cut the earnings link with pensions which the Labour Government had established. A recent study for the stockbrokers Greenwell Montagu has shown that if the earnings link had been retained the Government would be


spending an extra £4 billion on pensions this year. That is more than the £3·6 billion surplus in the PSBR which the Government claim as a benefit of the wise management which has financed the tax cuts. Add to that all the other earnings-related benefits whose links the Government have cut and we find that we are talking about more than £5 billion in this year alone, which is as much as the privatisation receipts.
The Government have been able to balance the books only by shedding their moral commitment to the poorest people. Today the Chief Secretary said of the Budget that it marked a
move away from a tax regime based on envy".
Indeed it did. But we have moved instead to a system based on short-sightedness and greed.

Mr. Rhodri Morgan: I rise in my customary role as the sweeper-up for the Opposition Back Benches to summarise some of the arguments before the winding-up speeches. This is the first Finance Bill in whose proceedings I have played a part. I shall deal principally with the broad effects on the economy of this and previous Budgets, relative to the claims that have been made for them by those responsible—and it is the Government's right to make such claims because they won the last election and the two before it.
When the Government came to power three elections ago in 1979, they claimed, in the famous Saatchi and Saatchi advertisement, that they would lower unemployment and liberate the economy. What actually happened? Initially, they found themselves playing with mechanisms that they did not understand, and unemployment increased by 250 per cent. They then changed their approach to the economy but said, "Britain needs a bit of a cold shower and a large pool of unemployment to restore management's right to manage."
They now see great virtue in creating jobs and are proud of the fact that unemployment—or at least the total number of registered unemployed—has fallen by 1 million in the past 24 months. It is rather sad for the Government that, now that they think they have good news to announce, no one believes them because of the way in which they fiddled the figures, and it is too late to regret the 19 changes that they made.
If it was right for the first 24 months to apply a dose of nanny's cold shower to restore discipline to the economy and restore the right of management to manage—management was extremely pleased by the introduction of the fear factor into labour relations because it felt that it made for better discipline in factories—why, eight years later, is it such a good idea to create jobs?
The Government now claim that their Budgets and adjustments to the fiscal stance have increased activity in the economy. Do they now claim too, that if they reduced unemployment to what it was in 1979—they said that they would reduce it further—they would be able to run the economy without inflation and with no loss of management's right to manage? Do they claim that they can achieve that as well as more investment and greater commitment to training and greater skilling, or will they have to retain a pool of unemployment to ensure what they see as the overriding virtue—breaking the back of the trade union movement and restoring management's freedom to make its decisions without consulting the work force?
That is the problem that they face. Will increased employment release the inflationary forces that built up in the 1960s and 1970s, and with the oil price increases of 1973 and 1979? That is the great unknown, and it is probably something that the Chancellor does not know, and does not wish to know, as the Budget that he presented to the House some weeks ago is probably his swan song.
In studying the Chancellor's final Budget we seek the answer to two questions. I believe that Conservative Members also will be interested in having answers to them, although they probably think that they know them already. First, is there a supply side miracle? Is the British economy more enterprising than it was before? As the economy returns to one in which there is a respectable level of unemployment—still higher than in 1979—will it be able to perform better? Is the economy more efficient? Following all the tax changes, top rate cuts and the "incentivisation" of high-rale taxpayers, will the British economy perform better? Will there be a reduction in the problems that it used to have, of failure to invest. failure to commit to training by comparison with Japan and Germany, and failure to meet delivery times, as that was not thought to be an important obligation?
Secondly, it is constantly rammed down our throats that although taxes are being cut, the tax take from the well-off has increased as a proportion of total tax revenue. Is it true that every time one lowers taxes the tax take from those for whom one has cut rates is also increased? Is it a reasonable proposition to put before the House that there is a causal relationship between lowering taxes and increasing the proportion of tax take from the top rate taxpayers?
Dealing first with the so-called supply side miracle, Conservative Members have told the House during the debates on the Bill that the fundamental basis of the Chancellor's Budget, and of the previous one, in which he also cut top rates of tax and made other changes in switching from lower income taxes to higher expenditure taxes, was that it "incentivised" the economy and encouraged more people to have a go in industry and to take more risks. The odd little tax haven was also introduced, through the BES and enterprise zones. So, in addition to the "incentivisation" that the Government believe is under way in the economy at large, there is to be even more "incentivisation", creating even more enterprise, in the enterprise zones. Those zones have been adjusted in the Bill so that one can now sell unit trusts or organise through unitisation investments in enterprise zones. The business enterprise schemes are not location-specific, but that is done as well in order to get that extra buzz into the entrepreneurship that one would anyway find in the economy.
When enterprise zones were orginally introduced in 1980 by the previous Chancellor of the Exchequer, the picture was given of little beehives of industry—little Hong Kongs full of small textile firms and exporters run by people with bright ideas who wanted to start off new businesses. However, anyone who has visited an enterprise zone knows that it is incredibly difficult to find any beehives of small industry there. One will not find any labour-intensive businesses in an enterprise zone, but instead DIY super-stores and occasionally some hotels. One will not find any manufacturing industry.
Enterprise zones were supposed to provide areas for super-enterprise within an enterprising economy that


would serve as examples to everybody else, but that is not what one finds. Instead, there is a lot of property development, with derelict land being covered with buildings. They are a million miles away from being buildings full of labour-intensive industries or little Hong Kongs. One finds there the same types of low-risk investment of a kind that would undoubtedly take place somewhere else if not in an enterprise zone, but with the addition of a tax haven, in opening a DIY super-store or a similar low-risk investment.
I welcomed BES developments when they were first introduced and thought that they were a good idea. I believed that they would help to stimulate risk-taking in British industry. However, we know that the bulk of BES investments went into old people's homes, which were funded in turn by the DHSS allowances brought in by another section of the Government. Those businesses were created by public sector money and provided a tax haven, and they involved no risk. Conservative Members will have to admit that, and, as a result, some adjustments to BES have been introduced in this year's Budget.
The enterprise economy is certainly not to be found in the tax havens that have been created by the Government in the enterprise zones and under business expansion schemes. In general they have further subsidised low-risk investment that would have taken place anyway. If one travels around an enterprise zone, old people's homes and DIY super-stores are what one will find, because BES money has been spent on such things.
The Bill has gone even further with the BES, so that the purchase of existing residential property or the creation of new residential property will be funded by it. A tax haven society has been created rather than an enterprise society.
In the light of the signals that I am receiving I shall sit down, but I trust that some hope will be restored and that a true enterprise society will be created, if only as a result of a change of Government.

Mr. Nicholas Brown: The Chief Secretary began the debate with characteristic dash and a pretty high standard of parliamentary abuse. He charged that the Labour party was wedded to the orthodoxy of the 1960s. It is unusual for a Conservative spokesman to place us within the 20th century, and I should be grateful to him for that at least. He went on to demonstrate that the Conservative party is wedded to the orthodoxy of the 1860s—the Victorian values in which it takes so much pleasure and in which the Bill is firmly rooted.
As the Chief Secretary went into the details of his speech, my hon. Friend the Member for Cardiff, West (Mr. Morgan), who has just spoken so well, was prompted to intervene. He drew from the Chief Secretary the reluctant admission that this Budget is not a tax-cutting Budget. Income tax has been reduced, but the overall tax burden remains the same.
The Chief Secretary thought it unusual that the Labour party should vote against a shift from direct to indirect taxation. That shift will be regressive because of the way in which it has been designed to affect the top and lower rates. It will advantage the wealthy, not the poor. The figures have been much quoted in the debate. The

wealthiest 1 per cent. of our population will be given an extra £2 billion—no doubt they will be extremely grateful for that—and the poorest 70 per cent. will also be given £2 billion. That will not be perceived as fair, unless the recipient is within the top 1 per cent. bracket.
The Chief Secretary went on to describe the Labour party, as he always does, as the party of high taxation. There is no evidence to support that claim. Under the previous Labour Government the total tax take was about 33 per cent. of gross domestic product. Since 1981 the Conservative Government's tax take, measured in the same way, has been about 38 per cent. and the Chief Secretary has said that it is forecast to remain at that level. Despite everything that it says, the Conservative party is committed to high taxation, but the Labour party, despite everything that the Conservatives say, maintains, in practice, lower overall rates of taxation.
The Chief Secretary believes that giving £2 billion to the wealthiest 1 per cent. will not encourage consumption conspicuously. We already know that, on average, such people are earning £75,000. By definition, they already have substantial levels of discretionary expenditure, yet the Government have given them an extra £2 billion. Surely that must encourage consumption.
The historic evidence base is stark. Last year we imported just over £5 billion-worth of motor cars, excluding parts, £131 million-worth of domestic washing machines, £133 million-worth of household fridges and freezers, £402 million-worth of videos, £265 million-worth of televisions, £286 million-worth of watches and clocks, and £308 million-worth of cameras and accessories. Those facts paint a stark picture.

Mr. Timothy Kirkhope: Will the hon. Gentleman please stop referring to what is being "given" by the Government to those who pay tax? They are not being given anything; they are merely being allowed to retain more of the wealth that they have created.

Mr. Brown: I try to be generous in giving way. Time is limited and I realise that I should not have given way. The hon. Gentleman did not even have the courtesy to attend most of the debate.
As the debate got into its proper swing, my hon. Friend the Member for Edinburgh, Central (Mr. Darling) made a point which dominated the debate when he said that this was a Budget of great contrasts. I got the clear impression that the right hon. Member for Shropshire, North (Mr. Biffen) agreed with him. My hon. Friend spoke about regional policy and decentralisation. He may well have seen the recent DHSS report which dealt with the relocation of a substantial part of that Department to Tyneside. It listed all the merits of the city of Newcastle upon Tyne and the region that surrounds it and then stated that the only reason there could not be a substantial relocation was that senior officials could not take the culture shock of moving to the north. That must be a poor reason for refusing what my hon. Friend calls for.

Ms. Armstrong: May I remind the Government that the Labour Government proposed to relocate the Property Services Agency in Middlesbrough, which would have brought 3,000 jobs north, but the first act of the right hon. Member for Henley (Mr. Heseltine) when he was Secretary of State for the Environment was to cancel that decision?

Mr. Brown: 'he north in particular pays a bitter price for the Labour party being in opposition rather than in government—something that is well recognised in the region.
My hon. Friend the member for Leeds, West (Mr. Battle) also sees this as a Budget of great contrast and, in his usual helpful manner, advised the House how God had joined the Labour party when the hon. Member for Spelthorne (Mr. Wiltshire) made that unusual attack on our opposition to the Bill. My hon. Friend pointed to motivations such as greed and avarice as the sort likely to disgust the deity and bring him down firmly on our side, where I am sure he has always been.
My hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington) spoke of a third of his constituents who live at or below supplementary benefit level and the declining employment base which serves that community. Many Labour Members are confronted with similar circumstances, and it is not surprising that the Budget is met with such hostility from us because there is nothing in it for our constituents.
My hon. Friend the Member for Gateshead, East (Ms. Quin) underscored this theme, which ran through all the speeches of my hon. Friends. As she was bound to do, she especially mentioned the fact that Monday was a black Monday for Tyneside. Not only did the Minister refuse to place important orders for frigates with Swan Hunter—in spite of its meriting them—but the big enemy of Tyneside, GEC, announced the closure of its Marconi plant in Gateshead, East, with the loss of 450 jobs. My hon. Friend the Member for Gateshead, East correctly stated that the Budget would not encourage infrastructure investment or help the unemployed.
Then we discussed one of the Chancellor's great reforming measures—his disaggregation proposals. As my hon. Friend the Member for Durham, North-West (Ms. Armstrong) accurately pointed out, the new right to fill in one's own tax form is not being greeted as the greatest feminist advance of all time by its recipients. The disaggregation proposals remain advantages that apply to rich married men who have unearned income and can trust their wives to transfer the allowances to them. They are the people who will benefit most. As my hon. Friend the Member for Western Isles (Mr. Macdonald) correctly pointed out, the Opposition have won the argument on that and all other points. It is not surprising that many Conservative Members who followed the details in Committee have not turned up to defend the measures enshrined in the Bill in this Third Reading debate. I hope that they have not become so used to remaining silent that they feel obliged to do so even when they are allowed to speak.
The Bill is controversial, yet our proceedings in Committee were not conducted in a stupid war of attrition, as was recommended by the hon. Member for Eastbourne (Mr. Gow). Nor was the Committee an ill-tempered or childish affair. Incidentally, I thank the hon. Member for Gedling (Mr. Mitchell) for his references to my sense of humour. We should like to thank my hon. Friend the Member for East Kilbride (Mr. Ingram), and no doubt the Government will want to thank the hon. Member for Morecambe and Lunesdale (Mr. Lennox-Boyd) for his and my hon. Friend's contribution to progress.
I and my hon. Friends the Members for Dunfermline, East (Mr. Brown), for Wrexham (Dr. Marek), and for Islington. South and Finsbury (Mr. Smith) are grateful to

our hon. Friends who served on the Committee—not only to those who have spoken in the debate, although they include my hon. Friends the Members for Cardiff, West (Mr. Morgan), for Edinburgh, Central (Mr. Darling), for Leeds, West (Mr. Battle), for Clydebank and Milngavie, for Durham, North-West. for Gateshead, East, for Edinburgh, South (Mr. Griffiths) and for Newcastle upon Tyne, North (Mr. Henderson). I also thank my hon. Friends the Members for Workington (Mr. Campbell-Savours) and for Oxford, East (Mr. Smith). My hon. Friend the Member for Workington apart, all our Back-Bench Members were drawn from the 1987 intake, and the work that they put into the Bill augurs well for the future of the parliamentary Labour party.
In years to come, when historians of our age study our Committee proceedings on the Finance (No. 2) Bill, perhaps in an attempt to discover why there was no glorious revolution in 1988, or even on 12 July, they will conclude that this legislation emerged in its present form largely as a result of the firm resolve and iron will of one man. I am not referring to the Chancellor of the Exchequer, although we took careful note of his visits to the Committee, presumably and wisely carried out to check up on his fellow Ministers and—if we are to believe the popular press—competitors. If I were in his position I should do the same. I do not mean the Chief Secretary, either. I, unlike his hon. Friends, did not sleep through his speech: I enjoyed it, and I enjoy it every time he makes it.
The Government's hero of the Bill has undoubtedly been the Financial Secretary to the Treasury, and to conclude Third Reading without referring to his role would be like discussing Hamlet without the ham. As he reflects on the 90 per cent. of the total Government Front Bench workload that he undertook during the Bill's passage, he will no doubt recall the Government's resistance to the Labour party's attack on the activities of Mr. van Hoogstraten—an attack continued to the end by my hon. Friend the Member for Edinburgh, South.
My hon. Friend has rightly emphasised the Labour party's fears that the combination of the taxman and Rachman in the business expansion scheme proposals will lead to exploitation, misery and rack renting for private sector tenants. It is not, however, for his predictable resistance to the Labour party that the Financial Secretary will catch the attention of future researchers; nor, I have to say—lest there be any doubt—will it be for his resistance to the parliamentary Liberal party. Let us face it: it could not be.
The first sitting of the Committee began with the hon. Member for Berwick-upon-Tweed (Mr. Beith) saying:
I have a vested interest in ensuring that we make progress as quickly as possible. I am sure that the Bill can be improved without unnecessary waste of time."—[Official Report, Standing Committee A, Thursday 12 May 1988; c. 3]
The hon. Gentleman did not hang about to see whether that was the case. He went on to absent himself entirely from the third, fifth, sixth, seventh, eighth, ninth, 10th, 11th, 12th, 13th and 14th sittings, and did not turn up yesterday for the Report stage. He has not turned up for Third Reading either.
The Government—in the person of the Financial Secretary—can be forgiven for writing to my hon. Friend the Member for Dunfermline, East:
You recently tabled a Parliamentary Question about the political parties currently qualifying for the purposes of section 24 Inheritance Tax Act 1984 … I am now advised that my reply was not as comprehensive as it should have


been. The list of political parties currently qualifying for the exemption ought to have included the Liberal Party. The Liberal Party, of course, still exists".
It took the Financial Secretary to the Treasury to confirm that to the rest of us. I hope that I have done the whole House a service by reading it into the record, purely for the avoidance of doubt.
The Financial Secretary will be remembered for a triumph that has not yet been remarked on. Let there be no doubt: the right hon. Gentleman has saved the British taxpayer more than £1 billion. Hon. Members are waiting to hear how he did it. He did it by resisting amendments moved by his hon. Friends—both on and off the Committee—designed to give further tax cuts to the wealthy.
When Opposition Members criticise the Tory Front Bench, we should always make sure that we are not blind to what is going on behind the Tory Front Bench. As we sat through the Committee stage, not a word was said from the Conservative Benches about the plight of the poor and dispossessed and the need for enhanced public expenditure on socially useful items such as hospitals, the nurses' pay award and the frigate-ordering programme for the Royal Navy. The overwhelming majority of Conservative Members were making pleas for tax scams for wealthy or corporate interests.
The main theme of the Bill was grotesquely accentuated, and echoed in a distorted way, by the Conservative Back-Bench Members' amendments. Yet the Bill itself remains as it is—a monument to the ever-widening divisions in our country, economic and geographic. Its passage through the House reflects a triumph of corporate over constituency interests, of property over people.

The Financial Secretary to the Treasury (Mr. Norman Lamont): The whole House enjoyed the speech by the hon. Member for Newcastle upon Tyne, East (Mr. Brown), as we enjoyed his speeches in Committee. We frequently wished that he had been in charge of some of the filibustering at the beginning, rather than some of his hon. Friends.
I agree with the hon. Gentleman that many of the new Labour Members made excellent speeches. As he says, that bodes well for the future of the Labour party: no doubt there will be an effective Opposition for many years to come.
My right hon. Friend the Member for Shropshire, North (Mr. Biffen), who does not appear to be present, told us that, somewhat incredibly, he had not quite recovered from the experience of being Chief Secretary, but he went on to give my right hon. Friend the Member for Huntingdon (Mr. Major) some advice, which I am sure was well taken. He also commented on the current account. He suggested that the forecast for the current account might be used as an indicator for the economy. It might be difficult to do that, given that the average error in the Industry Act forecast for the current account has been about £3 billion in the past 10 years.
My right hon. Friend expressed concern about inflation. He will recognise that the current account reflects the higher rate of growth that our economy has enjoyed in recent years. It reflects the fact that capital

goods imports in the past three months, compared with a year earlier, have increased by about 19 per cent., compared with imports of consumer goods, which have increased by about 10 per cent. The current account deficit is being financed by an inflow of capital which shows that the world outside rightly maintains a high level of confidence in our economy.
My right hon. Friend the Member for Shropshire, North expressed concern and some doubts about the Budget. My right hon. Friend the Chancellor of the Exchequer could hardly be accused of being imprudent in his Budget because, in the second or third sentence of his Budget speech, he announced that in this year's Budget, he did not have the opportunity to reduce taxation and that the share of GDP taken by taxation would remain broadly the same. He also announced that we would be repaying debt this year and that, as a result, he could balance the Budget for the first time for many years. He held out for the future the prospect of a balanced Budget as the lodestar. Given all those factors, I do not think that he could be accused of anything other than taking a stance of considerable prudence.

Mr. Darling: Is the Financial Secretary saying that the comments made by the right hon. Member for Shropshire, North (Mr. Biffen) lack substance? I should have thought that he was saying—and he said so in a constructive way—that there were worrying indicators, such as inflationary pressures, balance of payments problems and the trade deficit. Is the Financial Secretary saying that none of those things matter?

Mr. Lamont: I am sure that the comments of my right hon. Friend the Member for Shropshire, North were intended in a constructive manner. His concerns were about inflation. He and my hon. Friend the Member for Eastbourne (Mr. Gow) asked me to confirm that the containing and further reduction of inflation remain the Government's top priority. That is shown by the five rises in interest rates in the past few weeks, which have been criticised by the Opposition, but which underline our determination to keep inflation down and to get it down further.
The hon. Member for Dunfermline, East (Mr. Brown) complained about inadequate investment in the economy. I am not sure where he has been, because total investment in the economy is at an all-time high. The hon. Gentleman quoted various figures, saying that, if there had been greater investment in the past, our growth rate now would be even higher. I am not sure how he can be so certain about that, because it depends how that investment was directed, where it was directed and what sort of return it earned. That confirms what we have so often suspected of the Opposition—that they are interested in investment for investment's sake. They seek quantity of investment rather than return on investment. It is return that matters for the economy, not the building of a Socialist ideal of machine tools to manufacture machine tools to manufacture more machine tools. Investment in the economy is high and it is growing.
The hon. Member for Dunfermline, East suggested that the benefit of the tax cuts that were announced in the Budget might be wiped out by mortgage interest rate increases. It is not correct to say that a 1 per cent. rise in mortgage rates will wipe out the benefit of the tax cuts for a person on average earnings. Interest rates will no doubt


rise and fall in the years to come, but we have reduced tax rates permanently and we shall continue to do so. My right hon. Friend the Chief Secretary to the Treasury confirmed that in his opening speech this afternoon. The cuts in taxes and in national insurance contributions that we have made since coming to power in 1979 are worth nearly £10 a week for a man on average earnings. That is the extra amount that someone on average earnings would be paying if we had maintained the tax regime that we inherited from the Labour Government.

Mr. Morgan: When the Minister began, he talked about the fiscal stance of the Chancellor of the Exchequer and described it as one of the utmost prudence. I took that to mean—I think that he said this—that taxes had not been cut. Will he explain his triumphalism that the Government have reduced taxes? It seems that there is an inconsistency. Does the right hon. Gentleman think that he should get away with having it both ways?

Mr. Lamont: There is no great mystery. Since 1979 we have reduced tax rates and cut the amount of tax that people pay as a proportion of their earnings. The economy has been growing and people have become more prosperous while that has been happening. As I have said, there is no mystery.
There are many important provisions in the Bill. There are provisions that are popular that the Opposition chose to ignore, and that is typical of them. The hon. Member for Dunfermline, East did not mention the far-reaching proposals in the Bill for independent taxation. He neither condemned nor praised them. He said nothing in their favour. The hon. Member for Newcastle upon Tyne, East has moved from one stance to another in his criticisms of independent taxation. First, we were told that independent taxation was something for rich women. Then we were told that it was something for rich families. Finally—the hon. Gentleman confirmed this tonight—we were told that it was for rich men. That gives the game away. It is clear that the Opposition do not believe in independent taxation. If they think that removing the aggregation of a woman's income with that of her husband is of advantage only to men, the spirit of feminism and emancipation that the hon. Gentleman described has hardly reached the bingo clubs and Labour clubs in his constituency that he kept telling us about in Committee.
The hon. Member for Newcastle upon Tyne, East told us nothing about what the Bill does to close loopholes and to lessen the perks that are enjoyed by higher-rate taxpayers. We have taken measures to ensure a fairer system for the taxation of company cars. The forestry loophole has been removed. The Opposition urged us to do that before the Budget, and now they choose not to refer to it. We are not blocking a few minor reliefs. The reliefs that have been abolished and the loopholes that have been closed amount to about £800 million, which is about a third of the cost of the reduction of the higher rates of which the Opposition are so critical.
The truth is that the Opposition talk about avoidance and they urge us to do something about it, but we have done more to block loopholes than they ever did in their period of office. Our determination to stamp on avoidance and evasion is also demonstrated by the fact that we now have 3,200 investigators involved in investigative work in the Inland Revenue, compared with 1,600 under the previous Labour Government—twice as many.
This is rightly described as a reforming Budget. The Finance Bill builds on the steps that have been taken in other Finance Bills. We implemented a number of measures on capital gains tax in earlier Finance Bills and Budgets. We introduced indexation to make it a fairer tax, and in this Finance Bill we have carried that forward and rebased capital gains to 1982, which has remedied a major injustice whereby people with long-standing capital gains which were due purely to inflation were being taxed heavily.
One would have thought that Opposition Members would openly welcome the fact that we have now aligned the rates of capital gains and income tax. But, again, we hear not a word from them. The hon. Member for Wrexham (Dr. Marek) kept saying that capital gains are of interest only to the super-rich. When I pointed out that at least one third of people who pay capital gains tax pay at the basic rate, he had no reply. Because of that, he should have welcomed the fact that we have introduced a lower rate of capital gains tax of 25p for basic rate payers and a higher rate of 40p for those who are better off and can well afford to pay.
The Finance Bill benefits all the people of Britain. Twenty-three million people will benefit from the 2p basic rate cut, as they have benefited from the 6p cut in previous Finance Bills and Budgets. Three quarters of a million people will be taken out of taxation, which is a sharp contrast to what happened when the Labour party was in government, when the number of taxpayers increased by about 3 million and when the married man's allowance fell by 20 per cent. in real terms.
What do the Opposition now say about thresholds and the basic rate of tax? The Leader of the Opposition tells us——

Mr. Michael Brown: Where is he?

Mr. Lamont: I am coming to where he is.
The Leader of the Opposition says that the 25p people have nothing to fear, apart from the fact that he wants to make them into 27p people. That is all that they have to fear from the Opposition.
My right hon. Friend the Chief Secretary reaffirmed the point that has been made again and again in these debates—that, although we have cut the top rate of tax for the top 5 per cent. of taxpayers, that has brought in increased revenue. What we may not have pointed out so frequently is that the tax paid by the lowest 10 per cent. of the taxpayers has fallen by 20 per cent., whereas the top 10 per cent. are paying 26 per cent. more in taxation and national insurance contributions compared with when we came o power.
We have heard again and again in these debates about the super-rich. The hon. Member for Wrexham has never stopped talking about them. On Second Reading he mentioned them 12 times. In his speech on clause 93, which lasted 15 minutes, we had a reference to the super-rich every 82 seconds. When we pressed him to define the super-rich, he told us that they were people earning £200,000 or more a year. I have news for him. Those earning £200,000 or more a year are a minuscule number of people. Even if we confiscated all their income over £100,000 and taxed the rest, and distributed that among the total population, it would be worth only 50p a week to each person. I am afraid that there is not much to be


gained by squeezing the pips until they squeak, but there is a considerable amount to be lost if we discourage those people, if we drive them abroad, or if we stop them creating new businesses.
We must be clear about the higher rate taxpayers. Two thirds of those on higher rates earn less than £40,000 a year. Of course, £40,000 a year is a good salary. It is what the Leader of the Opposition earns, or perhaps a little more. [HON. MEMBERS: "Earns?"] It is a salary earned by managers, by top entertainers and by surgeons, but they are not the privileged elite. In many cases, those people have helped to create and build up businesses which create employment and increase the wealth of the country.
Opposition Members are still fighting the political battles of the past. They rant against the rich and the privileged, but a recent survey in a big business magazine showed that Britain is a meritocracy, where hard work and ability lead to success and reward. The same survey showed that more than two thirds of the 200 wealthiest people in Britain today are self-made men and women. The truth is not that we have too many rich people, but too few.
As my hon. Friends have said, it is a pity that the right hon. and super-rich Leader of the Opposition cannot be with us today. He is, of course, visiting the front-line states. I am sure that, while he is out there, he will be researching. If so, he will notice that the 39 per cent. top rate of income tax in Namibia, the 45 per cent. top rate in Zimbabwe and the 50 per cent. top rate in Botswana are all lower than the old rate that the Opposition are defending and committed to restoring. No doubt they will say that those are not the countries that they wish to compare us with.
All over the world, countries are cutting taxes and cutting the top rate—New Zealand, the United States, Canada, Australia and Germany. Worldwide there is a trend to cut the top rate, which shows that many countries agree with us that that helps to make economies more competitive. The attitude of the Opposition remains unchanged. It does not matter that we may raise less revenue or make ourselves less competitive; their attitude remains, "No tax cuts please, we're British."
Quite a few years ago, Lord Jay, before he was ennobled, remarked that as long as there is an England, there will always be progressive taxation. Even that has begun to be questioned, and some City analysts have been talking about repaying the national debt and abolishing income tax. That may be going just a little too far—[HON. MEMBERS: "Oh!"]—but the dramatic reductions in the Bill are a firm step in the right direction.
It has been said that all my hon. Friends regard all taxes as a distortion. My hon. Friends are quite right; taxes are a distortion. We should aim to have a system that raises the necessary money with the minimum of distortion and enables the economy to operate as effectively as possible.
Some Opposition Members recognise that the trend worldwide is to lower marginal rates of tax, but they complain that we are leading the trend, and that we have one of the lowest rates by international standards. That is certainly a contrast with when they were in power, when

not only was our basic rate the highest in the world, but so was our top rate. What was the result? Misery, tears and a lamentable performance by the economy.
The criterion by which tax reforms and tax cuts should be judged is simply, as the hon. Member for Cardiff, West (Mr. Morgan) said, whether they improve the performance of the economy. Tax cuts are only one of several supply side reforms and measures that we have undertaken. If they add even 1 per cent. to our growth rate, that will release £4 billion to £5 billion of resources each year, and with that we can improve and build our public services.
One of the mistakes that the Labour Government made was to try to make up for a lack of economic growth by increasing taxation. The more slowly the economy grew, the more they increased taxes. The result was less growth, the stifling of initiative and the stagnation of the economy. We have produced that growth and the British people are beginning to get the benefits. The benefits are flowing through to all the people in this country.
We need only contrast what has happened to people on half average earnings with what happened when the Labour party was in power. Under Labour, a person on half average earnings saw his living standards decline by 1 per cent., whereas while we have been in power a person on half average earnings has seen his earnings go up by nearly 26 per cent. That is the difference between the pseudo-compassion of the Opposition and the practical effects of the tax cuts that we have introduced. The more tax rates have gone down, the more the incomes of those below or near the poverty line have gone up. The benefits of prosperity have been spreading to all the people of this country.

Mr. Battle: The Financial Secretary has referred to half the average wage, which I imagine works out at about £120 a week. Does he admit that very many people who do not earn that much money have lost as a result of this Budget and complications with the social security system?

Mr. Lamont: I certainly do not admit that. The truth is that earnings throughout the economy at all levels of income have been increasing sharply. Those on below average earnings have seen their living standards increase sharply in the last three or four years. What the hon. Gentleman said has no foundation whatsoever in fact.
My right hon. Friend has produced a radical budget. He has produced his own fiscal version of the glorious revolution.
This is a very different country from the one that had to be bailed out by the International Monetary Fund a decade ago. At that time, after decades of decline, we had available to us only a gloomy, uninspiring future for the rest of the century. Now, thanks to our growth rate, which is faster than that of any other European country—we have outpaced Germany in the last few years and Japan this year—Britain has re-emerged as one of the pace-making economies. For the first time in many years there is a new hope, a new optimism and a new confidence in the British economy. I believe that the measures in this Bill, like those in previous Budgets, will contribute to that growth and to that well-deserved confidence.

Question put, That the Bill be now read the Third time:

The House divided: Ayes 228, Noes 179.

Division No. 415]
[9.58 pm


AYES


Aitken, Jonathan
French, Douglas


Alexander, Richard
Gale, Roger


Alison, Rt Hon Michael
Gardiner, George


Allason, Rupert
Garel-Jones, Tristan


Amess, David
Gill, Christopher


Amos, Alan
Glyn, Dr Alan


Arbuthnot, James
Goodhart, Sir Philip


Arnold, Jacques (Gravesham)
Goodson-Wickes, Dr Charles


Arnold, Tom (Hazel Grove)
Gorst, John


Ashby, David
Gow, Ian


Atkins, Robert
Grant, Sir Anthony (CambsSW)


Atkinson, David
Greenway, Harry (Ealing N)


Baker, Nicholas (Dorset N)
Greenway, John (Ryedale)


Baldry, Tony
Gregory, Conal


Batiste, Spencer
Griffiths, Sir Eldon (Bury St E')


Bellingham, Henry
Griffiths, Peter (Portsmouth N)


Bendall, Vivian
Grist, Ian


Bennett, Nicholas (Pembroke)
Ground, Patrick


Biffen, Rt Hon John
Grylls, Michael


Biggs-Davison, Sir John
Hamilton, Neil (Tatton)


Boswell, Tim
Hannam, John


Bottomley, Peter
Hargreaves, Ken (Hyndburn)


Bottomley, Mrs Virginia
Harris, David


Bowden, A (Brighton K'pto'n)
Haselhurst, Alan


Bowden, Gerald (Dulwich)
Hawkins, Christopher


Bowis, John
Hayhoe, Rt Hon Sir Barney


Boyson, Rt Hon Dr Sir Rhodes
Hayward, Robert


Braine, Rt Hon Sir Bernard
Heathcoat-Amory, David


Brandon-Bravo, Martin
Heddle, John


Brazier, Julian
Hicks, Robert (Cornwall SE)


Bright, Graham
Higgins, Rt Hon Terence L.


Brooke, Rt Hon Peter
Hogg, Hon Douglas (Gr'th'm)


Brown, Michael (Brigg &amp; Cl't's)
Holt, Richard


Browne, John (Winchester)
Hordern, Sir Peter


Bruce, Ian (Dorset South)
Howard, Michael


Buck, Sir Antony
Howarth, Alan (Strat'd-on-A)


Burt, Alistair
Howarth, G. (Cannock &amp; B'wd)


Butcher, John
Hughes, Robert G. (Harrow W)


Butler, Chris
Hunt, David (Wirral W)


Butterfill, John
Hunter, Andrew


Carlisle, John, (Luton N)
Irvine, Michael


Carlisle, Kenneth (Lincoln)
Jack, Michael


Carttiss, Michael
Jackson, Robert


Cash, William
Janman, Tim


Channon, Rt Hon Paul
Jessel, Toby


Chapman, Sydney
Johnson Smith, Sir Geoffrey


Churchill, Mr
Jones, Gwilym (Cardiff N)


Clark, Hon Alan (Plym'th S'n)
Jones, Robert B (Herts W)


Clark, Dr Michael (Rochford)
Jopling, Rt Hon Michael


Clark, Sir W. (Croydon S)
Key, Robert


Clarke, Rt Hon K. (Rushcliffe)
Kilfedder, James


Conway, Derek
King, Roger (B'ham N'thfield)


Cope, Rt Hon John
King, Rt Hon Tom (Bridgwater)


Couchman, James
Kirkhope, Timothy


Cran, James
Knapman, Roger


Currie, Mrs Edwina
Knight, Greg (Derby North)


Curry, David
Knowles, Michael


Davies, Q. (Stamf'd &amp; Spald'g)
Lamont, Rt Hon Norman


Davis, David (Boothferry)
Latham, Michael


Day, Stephen
Lawson, Rt Hon Nigel


Dickens, Geoffrey
Lester, Jim (Broxtowe)


Dorrell, Stephen
Lightbown, David


Dover, Den
Lilley, Peter


Dunn, Bob
Lord, Michael


Durant, Tony
McCrindle, Robert


Eggar, Tim
MacKay, Andrew (E Berkshire)


Emery, Sir Peter
Maclean, David


Evennett, David
McNair-Wilson, Sir Michael


Fallon, Michael
McNair-Wilson, P. (New Forest)


Favell, Tony
Major, Rt Hon John


Fookes, Miss Janet
Malins, Humfrey


Forman, Nigel
Mans, Keith


Forth, Eric
Maples, John


Fowler, Rt Hon Norman
Marshall, John (Hendon S)


Fox, Sir Marcus
Marshall, Michael (Arundel)


Franks, Cecil
Mawhinney, Dr Brian


Freeman, Roger
Maxwell-Hyslop, Robin





Mayhew, Rt Hon Sir Patrick
Sumberg, David


Meyer, Sir Anthony
Summerson, Hugo


Miller, Sir Hal
Taylor, Ian (Esher)


Miscampbell, Norman
Taylor, John M (Solihull)


Mitchell, Andrew (Gedling)
Taylor, Teddy (S'end E)


Mitchell, David (Hants NW)
Temple-Morris, Peter


Moate, Roger
Thompson, Patrick (Norwich N)


Monro, Sir Hector
Thorne, Neil


Montgomery, Sir Fergus
Thornton, Malcolm


Morrison, Sir Charles
Thurnham, Peter


Morrison, Rt Hon P (Chester)
Townend, John (Bridlington)


Moss, Malcolm
Tracey, Richard


Moynihan, Hon Colin
Tredinnick, David


Mudd, David
Trippier, David


Neubert, Michael
Twinn, Dr Ian


Newton, Rt Hon Tony
Vaughan, Sir Gerard


Nicholson, David (Taunton)
Walden, George


Onslow, Rt Hon Cranley
Waller, Gary


Oppenheim, Phillip
Ward, John


Porter, David (Waveney)
Wardle, Charles (Bexhill)


Renton, Tim
Watts, John


Rhodes James, Robert
Wells, Bowen


Riddick, Graham
Wheeler, John


Roe, Mrs Marion
Whitney, Ray


Rossi, Sir Hugh
Widdecombe, Ann


Ryder, Richard
Wiggin, Jerry


Sackville, Hon Tom
Wilkinson, John


Scott, Nicholas
Wilshire, David


Shepherd, Colin (Hereford)
Winterton, Mrs Ann


Sims, Roger
Winterton, Nicholas


Spicer, Michael (S Worcs)
Wood, Timothy


Stanbrook, Ivor
Woodcock, Mike


Steen, Anthony
Yeo, Tim


Stern, Michael
Young, Sir George (Acton)


Stevens, Lewis



Stewart, Allan (Eastwood)
Tellers for the Ayes:


Stewart, Andy (Sherwood)
Mr. Peter Lloyd and Mr. Mark Lennox-Boyd.


Stokes, Sir John



Stradling Thomas, Sir John





NOES


Abbott, Ms Diane
Cryer, Bob


Adams, Allen (Paisley N)
Cummings, John


Allen, Graham
Cunliffe, Lawrence


Archer, Rt Hon Peter
Dalyell, Tam


Armstrong, Hilary
Darling, Alistair


Barnes, Harry (Derbyshire NE)
Davies, Rt Hon Denzil (Llanelli)


Barron, Kevin
Davies, Ron (Caerphilly)


Battle, John
Davis, Terry (B'ham Hodge H'l)


Beckett, Margaret
Dixon, Don


Bell, Stuart
Dobson, Frank


Benn, Rt Hon Tony
Duffy, A. E. P.


Bennett, A. F. (D'nt'n &amp; R'dish)
Dunnachie, Jimmy


Bermingham, Gerald
Dunwoody, Hon Mrs Gwyneth


Bidwell, Sydney
Eadie, Alexander


Boateng, Paul
Evans, John (St Helens N)


Boyes, Roland
Fatchett, Derek


Bradley, Keith
Field, Frank (Birkenhead)


Bray, Dr Jeremy
Fields, Terry (L'pool B G'n)


Brown, Gordon (D'mline E)
Flannery, Martin


Brown, Nicholas (Newcastle E)
Flynn, Paul


Buchan, Norman
Foot, Rt Hon Michael


Buckley, George J.
Foster, Derek


Caborn, Richard
Fraser, John


Callaghan, Jim
Fyfe, Maria


Campbell, Ron (Blyth Valley)
Galbraith, Sam


Campbell-Savours, D. N.
Garrett, John (Norwich South)


Canavan, Dennis
George, Bruce


Clarke, Tom (Monklands W)
Godman, Dr Norman A.


Clay, Bob
Golding, Mrs Llin


Clelland, David
Gould, Bryan


Clwyd, Mrs Ann
Graham, Thomas


Cohen, Harry
Grant, Bernie (Tottenham)


Coleman, Donald
Griffiths, Nigel (Edinburgh S)


Cook, Frank (Stockton N)
Griffiths, Win (Bridgend)


Cook, Robin (Livingston)
Grocott, Bruce


Corbett, Robin
Hardy, Peter


Corbyn, Jeremy
Harman, Ms Harriet


Cousins, Jim
Hattersley, Rt Hon Roy


Cox, Tom
Haynes, Frank






Healey, Rt Hon Denis
O'Brien, William


Heffer, Eric S.
O'Neill, Martin


Henderson, Doug
Orme, Rt Hon Stanley


Hinchliffe, David
Parry, Robert


Hogg, N. (C'nauld &amp; Kilsyth)
Patchett, Terry


Holland, Stuart
Pike, Peter L.


Home Robertson, John
Powell, Ray (Ogmore)


Hood, Jimmy
Prescott, John


Howarth, George (Knowsley N)
Primarolo, Dawn


Howell, Rt Hon D. (S'heath)
Quin, Ms Joyce


Howells, Geraint
Radice, Giles


Hughes, John (Coventry NE)
Rees, Rt Hon Merlyn


Hughes, Roy (Newport E)
Reid, Dr John


Hughes, Sean (Knowsley S)
Richardson, Jo


Illsley, Eric
Robertson, George


Ingram, Adam
Robinson, Geoffrey


Janner, Greville
Rooker, Jeff


John, Brynmor
Ross, Ernie (Dundee W)


Jones, Barry (Alyn &amp; Deeside)
Rowlands, Ted


Jones, Martyn (Clwyd S W)
Ruddock, Joan


Leighton, Ron
Salmond, Alex


Lestor, Joan (Eccles)
Sedgemore, Brian


Litherland, Robert
Sheldon, Rt Hon Robert


Lloyd, Tony (Stretford)
Shore, Rt Hon Peter


Lofthouse, Geoffrey
Short, Clare


Loyden, Eddie
Skinner, Dennis


McAllion, John
Smith, C. (Isl'ton &amp; F'bury)


McAvoy, Thomas
Snape, Peter


Macdonald, Calum A.
Spearing, Nigel


McNamara, Kevin
Steinberg, Gerry


McTaggart, Bob
Stott, Roger


McWilliam, John
Strang, Gavin


Madden, Max
Taylor, Matthew (Truro)


Mahon, Mrs Alice
Thompson, Jack (Wansbeck)


Marek, Dr John
Turner, Dennis


Martin, Michael J. (Springburn)
Vaz, Keith


Martlew, Eric
Wall, Pat


Maxton, John
Walley, Joan


Meacher, Michael
Wardell, Gareth (Gower)


Meale, Alan
Wareing, Robert N.


Michael, Alun
Welsh, Michael (Doncaster N)


Michie, Bill (Sheffield Heeley)
Williams, Rt Hon Alan


Millan, Rt Hon Bruce
Williams, Alan W. (Carm'then)


Mitchell, Austin (G't Grimsby)
Wilson, Brian


Morgan, Rhodri
Winnick, David


Morley, Elliott
Wise, Mrs Audrey


Morris, Rt Hon J. (Aberavon)
Worthington, Tony


Mowlam, Marjorie
Wray, Jimmy


Mullin, Chris



Murphy, Paul
Tellers for the Noes:


Nellist, Dave
Mr. Allen McKay and Mr. Ken Eastham.


Oakes, Rt Hon Gordon

Question accordingly agreed to

Bill read the Third time, and passed.

Orders of the Day — Coal Industry

The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer): I beg to move,
That the draft Redundant Mineworkers and Concessionary Coal (Payments Schemes) (Amendment) Order 1988, which was laid before this House on 5th July 1988, be approved.
This is a technical, amending order. Its purpose is to make amendments to certain of the redundant mineworkers payments schemes arising from the inter-relationship between the schemes and social security legislation. The redundant mineworkers payments schemes provide for lump sum and weekly payments to mineworkers who became redundant on or before 28 March 1987, when the latest scheme closed to new entrants. Since then British Coal has been responsible for its own redundancy terms.
There are four RMPS schemes still in operation. They are set out in orders made in 1978, 1983, 1984, and 1986, to which amendments are proposed in the present order. The proposed amendments have three purposes. The first concerns the 1986 scheme only and would be brought into effect by article 5(b) and (c) of the present order. It is designed to protect some of the beneficiaries of the 1986 scheme from having their benefit withdrawn in consequence of certain provisions of the Social Security Act 1988.
In drafting the 1986 scheme as part of the restructuring of the coal industry, the Government decided that, to maintain the value of the RMPS terms to potential beneficiaries, those who had made insufficient national insurance contributions in 1984–85 should not be disqualified from or given reduced rates of RMPS benefit. The 1986 scheme provided full RMPS benefits for men who left the industry in the 1986 benefit year ending 3 January 1987. For those men the relevant tax year for assessing their eligibility for social security benefits, and so for RMPS, was 1984-–85. Without the provisions of the 1986 scheme, many of them would not have qualified for RMPS benefits as their 1984–85 national insurance contributions would have been insufficient to satisfy the conditions for social security benefits.
The reason for the proposed amendment is that section 6 of the Social Security Act 1988, which comes into effect on 2 October, changes the contribution conditions for social security benefits. One of its effects is that 1984–85 also becomes a relevant tax year for men who left the industry in the 1987 benefit year—that is, between 4 January 1987 and 28 March 1987, when the RMPS scheme closed to new entrants and British Coal took up the new scheme.
Several thousand men took redundancy in that period. Without the amendment now proposed, many of them could lose their entitlement to RMPS. Such a change in the terms on which those men left the industry would clearly be unfair. The amendment will have the effect of maintaining those terms.
The other amendments contained in the order are to the 1978, 1983, 1984 and 1986 schemes. They have two purposes. The first is to eliminate possible overpayments to RMPS beneficiaries who are also in receipt of invalid care allowance. The weekly payments under the RMPS schemes are made to former mineworkers who took redundancy when over 50, or 55 in some schemes. Those payments normally continue up to the age of 65.
To qualify for weekly RMPS payments a person must normally meet the conditions for receipt of unemployment benefit, sickness benefit, invalidity pension or severe disablement allowance. Entitlement to unemployment benefit is normally exhausted after 12 months. An RMPS beneficiary then receives a weekly payment equal to the amount of unemployment benefit he would have received if his entitlement had not been exhausted. That is known as unemployment benefit equivalent, or UBE.
RMPS rules were drafted so that the schemes were integrated with the social security system as far as possible. Where an RMPS beneficiary also receives a social security benefit that affects entitlement to unemployment benefit, UBE is adjusted accordingly, just as unemployment benefit would be if he were still receiving it.
Last year some cases came to light where an RMPS beneficiary was receiving invalid care allowance as well as UBE. There are provisions under social security regulations for dealing with overlapping benefits. Under them, payment of unemployment benefit would extinguish payment of invalid care allowance. That is done by ensuring that when a claimant is eligible for more than one income maintenance benefit at the same time, only an amount equivalent to the higher benefit is paid. Social security legislation, which is the responsibility of my right hon. Friend the Secretary of State for Social Services, does not provide for that to be done in the case of UBE, which is unique to the RMPS scheme. The amendments in the present order are intended to remedy that.
The final purpose of the amendments in this rather technical order—for which I apologise—is to remove a technical defect that has recently come to light in the drafting of the RMPS schemes.

Mr. Kevin Barron: I understood it quite well until the Minister started to describe it.

Mr. Spicer: This debate may not give the hon. Gentleman an opportunity for the rhetoric that we usually hear from the Opposition, but it is important to those who receive these benefits.
The schemes provide that, if any pension received by a beneficiary is in excess of £35 a week, that excess shall be deducted from RMPS weekly payments. But a similar requirement applying to men over the age of 60 is laid down in social security legislation.
It was never intended that such deductions should be made twice from RMPS benefit; nor has that ever been done. Our legal advice is that double deductions are strictly required unless the relevant RMPS regulations are amended, as in the present order. The change is a purely technical one to ensure against double deductions.
I hope that the House will agree that these proposed amendments—which are technical, and perhaps boring to some, but which are important to those affected—are both fair and necessary. I invite the House to approve the order.

Mr. Alexander Eadie: The Minister has frankly admitted that the order is technical, although he has tried to inform the House as best he can. According to what he has told us, we are still living in the wake of the great strike of 1984–85 and still trying to tidy up its consequences for some miners.
British Coal had to introduce its own redundancy scheme when the Government abandoned theirs. There

was some debate when the Government did that, but we live with the present position. The Minister was right to draw the attention of the House to the fact that several thousand men will be affected by the order, and I believe that the House will welcome any amendments that affect them.
The Minister spoke about double deductions, and that made me think about double jeopardy. I am sure that some of my hon. Friends will wish to question the Minister further, given that he has admitted that the order is complicated.
I notice that licensed mines are not covered by the order. The Minister will recall that hon. Friends and I have raised this matter with him in previous debates. If my memory serves me right, I asked about the Blinkbonny miners, who come from my constituency. The Minister told us that those miners were covered only by the state redundancy scheme.
Those who are campaigning for an extension of licensed mines should note that, in this context, such miners are disadvantaged and that the accident rate in those mines is three or four times higher than that in British Coal mines. That is a sobering thought. Although we did not receive any promises from the Minister in the previous debates, I had hoped that the order would provide an opportunity to consider licensed mines.
The Minister has admitted that this is a tidying up order and that some of it is complicated and difficult to understand. How will the new job scheme to which he referred affect the RMPS? I believe that the scheme will begin around the end of September. Miners who opt for retraining in their make up for RMPS may find themselves disfranchised. The Minister is aware that under the RMPS one has to be deemed to be unemployed. Will that act as a deterrent to retraining? Will the Minister lean on such people?
The Minister spoke about being deemed to be unemployed and the UBE after a year's unemployment It would be of interest to miners if he could clarify what will happen at the end of September or October to miners who opt for retraining. Will they be punished or leant on by the Minister? [Interruption.] The hon. Member for Amber Valley (Mr. Oppenheim) does not understand what I am talking about, but I know that the Minister does. I hope that when the Minister replies he will give some thought to that.
The Minister must be aware, if only as a constituency Member, of the turmoil created by the Government when they changed the social security regulations. I doubt whether any hon. Member has not had a substantial postbag about that. The Minister knows that I am referring to how people have been punished severely by having their housing benefit reduced. This order has a direct link with that.
To some extent the position is anomalous. A concessionaire receives money in lieu of concessionary coal because he or she cannot burn solid fuel at home for various reasons. I do not wish to detain the House by elaborating on those reasons, and I know that the Minister is aware of them. We are dealing mostly with elderly people who served, or whose husbands served, the mining industry well. Because people receive money in lieu of concessionary coal, they are further ensnared by the housing benefit regulation changes.
The House must understand that most of those people have already lost severely under the new regulations. They


now find that because they receive money in lieu of concessionary coal it is deemed to be income and they lose further. Our bureaucracy could be described as having gone mad, because if people can burn concessionary coal in their homes it is disregarded for housing benefit purposes. I see the hon. Member for Sherwood (Mr. Stewart) nodding in agreement.
Before the debate some people told me that if I raised this matter tonight the Government, known for their unfeeling attitude, would quickly solve the anomaly by ensnaring both for housing benefit purposes. If the Government were to adopt that cynical solution, it would be a national scandal. In some quarters it would be described as spiteful malevolence towards the elderly. This is important to many elderly people, and I invite the Minister to comment.
The Minister told us how complicated the last aspect—invalid care allowances—was. References to them are strewn all over the instrument. The order seeks to amend

section 37 of the Social Security Act 1975. My hon. Friends, if not all hon. Members, would agree that we need further explanation of this. I draw the Minister's attention to paragraph 5(b)(iii), which says:
the existing paragraph (3) shall be renumbered (4) and in that paragraph for the words from 'shall be reduced' to the end shall be substituted the following words—
we are coming to the guts of the order—
'shall, if it has not been reduced by virtue of section (5)1 of the Social Security (No. 2) Act 1980, be reduced, further reduced or extinguished, as the case may be, by the amount by which the weekly total of such benefit exceeds £35.'
That can hardly be described as a neutral change. The figure of £35 can probably be traced to the Social Security (No. 2) Act 1980. The 1975 Act is being amended. I notice that the Minister is becoming as confused as were the people who helped me to understand the order. However, they helped me to come to grips with it, and we have come to the conclusion that this provision is a minus, not a plus. Will the Minister explain or clarify it?
As the Minister said, several thousand people will benefit from the order, and we certainly do not intend to divide the House on it.

Mr. Phillip Oppenheim: When I telephoned the Department of Energy earlier this week, I was told that one of the reasons for the order was that certain entitlements and benefits were to be extended to men who were on strike in 1984 and who would not otherwise have been entitled to them for that period. Earlier today I had a rather hassled and worried phone call from the Department to say that the order had nothing to do with concessionary coal, knowing, as the caller did, of my interest in that.
The order is known as the Redundant Mineworkers and Concessionary Coal (Payments Schemes) (Amendment) Order 1988, and I shall speak on concessionary coal unless, Mr. Deputy Speaker, you rule me out of order. I have no personal objection to the fact that men who were on strike in 1984 should have certain benefits extended to them. I know a number of men in my constituency who were on strike. They came to see me during the strike and told me frankly why they were on strike. Some were on strike because they felt loyalty to their workmates, some because they felt loyalty to their union and some because they were afraid that they would be in trouble if they were not. Some were on strike because they genuinely felt that that was the best way of preserving jobs in their industry. I have to point out that a number of those who fell into the latter category have rather changed their minds.
The fact is that the strike brought no benefits to anyone. We all ended up as losers. I do not think that it would help the situation, or lessen the bitterness that remains, to try to deprive those who were on strike of a certain number of benefits. I am surprised, however, that the Government want to extend benefits to men who were on strike—with which I have no particular quarrel—while not extending them to the group I have described as the forgotten miners. Those men contributed to coal pools in the 1960s, but were made redundant in 1968, during the massive cuts in the industry that were instituted by the Wilson Government when some 10,000 miners in my constituency lost their jobs. We should remember that not only Conservative Governments close mines: more mines and more jobs have been lost under Labour Governments.
When the men were made redundant, they were specifically told by the Government and their union that they would qualify for concessionary coal. They deserved to qualify. Under the localised schemes that were in operation in the 1960s, they had contributed to coal pools out of their own coal allowances, on the basis that they were building up a stock of coal that would benefit them in the future. But, having received those assurances, after being made redundant they were told that they did not qualify after all.
I consider it fundamentally unjust that, when people have contributed to a fund on the basis that they will benefit from it in their old age, they should be told when they have been made redundant or have retired that they do not qualify after all. The reason that those men did not qualify was that the system was changed in the late 1960s so that only certain people benefited from concessionary coal. The localised coal pools were ended, and it was all merged into a massive National Coal Board pool. Unfortunately, during that structural changeover the beneficiaries were also changed, and many of the men who were made redundant lost out.
Over the past three or four years, I have pressed the matter with my right hon. and hon. Friends in the Department of Energy. I have been told that, although the Government are very sympathetic to the plight of the forgotten miners, they are not allowed to do anything because Governments do not act retrospectively. The trouble is that in 1971 the Government did decide to act retrospectively. They extended concessionary coal benefits to certain classes, but unfortunately left out the mass of miners who were made redundant in the 1960s.
This is a glaring injustice. I do not blame the current Government for it; it is largely the responsibility of the Government who were in power in the 1960s, and of the National Union of Mineworkers, which I do not think looked after its people very well in this instance. I feel, however, that subsequent Governments have had a responsibility——

Mr. Eric Illsley: Will the hon. Gentleman give way?

Mr. Oppenheim: I am about to finish. Perhaps the hon. Gentleman will have an opportunity to make his points later.
Governments of all hues should have examined the matter and made the relatively small provision that would have been needed to allow the forgotten miners to draw on the concessionary coal benefit to which, after all, they had contributed during their working days. I mean this as a criticism not of the present Government, but of all Governments since the 1960s who have not taken the plight of those forgotten miners into account.

Mr. David Ashby: My hon. Friend and I have worked together over the past three or four years trying to persuade the Government to deal with the plight of the forgotten miners. Their plight is historical; for most of them the problem arose under the Labour Government. Does my right hon. Friend feel that if the time is right to act—perhaps together with a union such as the Union of Democratic Mineworkers—the matter should be incorporated in the next round of wage negotiations?

Mr. Oppenheim: My hon. Friend makes a valid point. I pay tribute to the work that he has done and the support that he has given to the cause over the past three years. I am also grateful for the fact that he has promoted me to being a right hon. Gentleman. I may eventually have the privilege of being a member of the Privy Council, but I urge my hon. Friend not to hold his breath in waiting for that event.

Mr. Illsley: rose——

Mr. Oppenheim: I gave way to my hon. Friend because I know that he does not intend to speak later whereas many Opposition Members intend to do so.
I have spoken to the UDM and I have urged it to make provision for the forgotten miners when it has its wage negotiation rounds and it has been sympathetic to that. I ask the hon. Member for Barnsley, Central (Mr. Illsley), who does not appear to be able to keep his mouth shut from his sedentary position and who has consistently said that the Government have done nothing, what the Labour Government did in the 1970s when his hon. Friend the Member for Bolsover (Mr. Skinner) wrote copious letters to the Department of Energy, urging it to do something.


Let us remember that it is not only this Government who have refused to help the forgotten miners. His Government were more directly involved in the closing of mines in the 1960s and consistently refused to listen to the hon. Member for Bolsover when he urged the Department to make concessionary coal available to those men in the 1970s.
I know that my hon. Friend the Minister is well aware of the problem. I have made several representations to the Department and have always been listened to courteously and sympathetically, so I shall not detain the House any longer. I sincerely hope that my hon. Friend will carefully consider the plight of the few remaining forgotten miners of the 1960s, who still suffer from the injustice and the anomaly. I hope that, during the substantial shake-up that the coal industry will experience over the next few years, my hon. Friend will take the opportunity to make restitution to the forgotten miners.

Mr. Peter Hardy: On a point of order, Mr. Deputy Speaker. I ask you to ensure that we have successive speeches by Labour Members, in view of the fact that the hon. Member for Amber Valley (Mr. Oppenheim), although he presented a just case, strayed widely and made some irrelevant comments, particularly in respect of privatisation, and in view of the lengthy intervention by his hon. Friend the Member for Leicestershire, North-West (Mr. Ashby), although the hon. Gentleman refused to give way to my hon. Friend the Member for Barnsley, Central (Mr. Illsley).

Mr. Kevin Barron: I do not intend to speak for very long. I welcome the fact that the order protects those people who did not pay the full benefits during 1984–85. I understand that the Minister has brought forward the order because of the recent changes in social security legislation and agrees that the position needs to be made clear in that regard. I hope that he will consider one particular problem in the new social security legislation as it affects those in receipt of benefits under the redundant mineworkers' pension scheme.
My hon. Friend the Member for Midlothian (Mr. Eadie) mentioned the problem, which is not to be found in all coal mining areas, regarding unemployment benefit credits and whether people are qualified to receive them. In April, an ex-miner, who has been retired for some years under the present scheme, was stopped 12 months' payment of unemployment benefit because he had not qualified for the benefit under the new Act. Under the availability for work test, claimants have to answer several questions that are posed by the Department. If they fail satisfactorily to answer any one of them, their unemployment benefit is stopped.
In April, the ex-miner to whom I have referred was 59 years of age. The letter from the Department explained why his unemployment benefit credit had been stopped, and part of the letter stated:
You have placed restrictions on the nature and conditions of employment which you are prepared to accept.
The availability for work test does not seem to be relevant to ex-miners who have retired under the redundancy scheme. I understand that there are quite a few cases of this

sort in Leicestershire, and perhaps the hon. Member for Leicestershire, North-West (Mr. Ashby) will draw attention to them.
The Department allows a claimant a reasonable time, following his unemployment, to find the type of work that he wants, but he is expected to "broaden his horizons." The man in question began work in the mines when he was 15 years of age. In effect, he was retired from work. We all know that there are no vacancies in the industry for miners. Under the new restart scheme, he was told in February that he must apply for work elsewhere and "broaden his horizons." I believe that he was 57 years of age when he left the industry under the terms of the redundancy scheme. He thought that he was finished for ever, as it were. His horizons were probably no broader than the jobs that he had had during all his years in the industry. He then found that his benefit was stopped.
In June, the Department wrote to him, saying that, as he had reached the age of 60, he would no longer have to sign on as unemployed or to pass the availability for work test. It was deemed that he was no longer available for work under the regulations, which have been changed since the scheme was introduced. He was told that he had no longer to sign on although his benefit had been stopped. I understand that his case is being examined sympathetically.
This procedure is causing problems in certain areas. I ask the Minister to urge his counterpart in the Department of Employment to send guidelines to those regional offices where there are those who come within the redundancy scheme who are likely to fall foul of the availability for work test. Many of them were retired when they were over 50 years of age, and they are now approaching 60. It is unfair that those men should encounter problems because they fail to respond to a questionnaire or to a question asked by a local official. Those who finished their working life under the 1977 Act, who are recognised as being special, are not likely to be looking for work or broadening their horizons at 59 years of age.

Mr. Frank Haynes: I heard what my hon. Friend the Member for Midlothian (Mr. Eadie) said about the Minister. He asked him to take into account that he is a Member of Parliament with his own constituency problems. I realise that the Minister has not been in his post all that long, but he constantly reminds us that he visited a. pit in Easington where he stood as a candidate about 10 years ago. That is the kind of coal mining experience that he has.
Bearing in mind what the hon. Member for Amber Valley (Mr. Oppenheim) said, there is one point that I must take up immediately. I notice that the hon. Gentleman has gone.

Mr. Ashby: He has gone for only a second. He will be back.

Mr. Haynes: I am not asking the hon. Gentleman to tell me where the hon. Member for Amber Valley is.

Mr. Ashby: The hon. Gentleman was.

Mr. Haynes: I am not asking the hon. Gentleman at all. If I were to ask such a question, I would ask Mr. Deputy


Speaker. What I am saying is that the hon. Member for Amber Valley is not present now. He is as two-faced as hell——

Mr. Ashby: Withdraw.

Mr. Haynes: That is not unparliamentary. If it were, I would have been pulled up by now.

Mr. Andy Stewart: Withdraw.

Mr. Haynes: Why does not the hon. Gentleman keep his mouth shut?

Mr. Ashby: Why does not the hon. Member for Ashfield (Mr. Haynes) say what he said to my hon. Friend's face?

Mr. Haynes: I am only referring to the fact that the hon. Member for Amber Valley is not here, so that that appears in Hansard, otherwise it would appear as though he attended throughout the debate. That is all I am doing, and I have done it.

Mr. Alan Meale: On a point of order, Mr. Deputy Speaker. This is a serious debate. Will you bring the House to order so that we can hear the speech of my hon. Friend the Member for Ashfield (Mr. Haynes)?

Mr. Deputy Speaker (Sir Paul Dean): I am grateful to the hon. Gentleman for his assistance, but I am sure that the hon. Member for Ashfield (Mr. Haynes) is perfectly capable of looking after himself.

Mr. Ashby: Further to that point of order, Mr. Deputy Speaker. Is it proper to call an hon. Member as two-faced as hell when he is not in the Chamber? Is that parliamentary language?

Mr. Deputy Speaker: Strong language is in order. I have heard nothing unparliamentary so far.

Mr. Haynes: I respect you, Mr. Deputy Speaker. Mr. Deputy Speaker is there to protect a Member when he gets in difficulties from a barracker. The hon. Member for Leicestershire, North-West (Mr. Ashby) thinks that he is in a flaming court. He is in the Chamber and he should listen to what is being said.
The young fellow from Amber Valley was talking about my hon. Friend the Member for Bolsover (Mr. Skinner) not long ago. I remember a press report in the hon. Gentleman's locality. He had seriously condemned my hon. Friend the Member for Bolsover. Yet tonight he is talking the other way. That is what I mean when I say that he is two-faced. The same problem arises on concessionary fuel, so I have proven my point that the hon. Gentleman is two-faced. I felt that I had to make the point in the interests of my hon. Friend.

Mr. Ashby: Will the hon. Gentleman give way?

Mr. Haynes: No. The hon. Gentleman can sit down.

Mr. Ashby: Will the hon. Gentleman give way on that point?

Mr. Haynes: No. If the hon. Gentleman is lucky enough to catch your eye, Mr. Deputy Speaker, he can make his own speech. I want the Minister to hear what I have to say, so if the hon. Gentleman will sit down I can get on with my speech.
The young chappie, the hon. Member for Amber Valley, has not lived for very long on this planet. He does not know a great deal about the mining industry and the National Coal Board scheme. Beneficiaries who should be receiving coal have been seriously affected, as my hon. Friend the Member for Midlothian said, because of the cutbacks in housing benefits. My hon. Friend said that some people are losing out because of cash in lieu and the change in the social security benefits. Widows in my constituency are seriously disabled and are entitled to concessionary fuel, but because they applied for cash in lieu, and received that cash from British Coal, they are now being told that they will lose more than that amount from their housing benefits.
I should like the Minister to examine this matter because I have seen at the Dispatch Box the Prime Minister, the Secretary of State for Social Services and other Ministers responsible for social security full of compassion when speaking about disabled people, yet those widows are being treated in that way.
That little lad, who is not here now, should have a lesson on the National Coal Board scheme, because it really started with the question of private ownership of the mining industry and the allocation of concessionary fuel. After nationalisation, NCB schemes were introduced in the various areas, and some areas were better off than others.

Mr. Ashby: Will the hon. Gentleman give way?

Mr. Haynes: Let me finish my point. The amount received depended upon the amount of coal produced in the area. As Nottinghamshire was a high production area, it had a decent return. There was unfairness right across the coalfields—even Derbyshire was having a rough deal—and the men——

Mr. Ashby: Will the hon. Gentleman give way?

Mr. Haynes: No, I shall not give way to the hon. Gentleman. He spends more time in court than in the House and he now wants me to give way.

Mr. Ashby: That is right.

Mr. Haynes: The membership in the industry decided, on a vote—a democratic method—to have a National Coal Board scheme. It was not as though the board or the union decided; the men decided to have the scheme. At the time that they took on the scheme they thought that everyone would have a fair deal.

Mr. Allen McKay: My hon. Friend is educating Conservative Members; I will educate them a little more. I worked on the national scheme for British Coal—or the National Coal Board as it was then—and negotiated with the National Union of Mineworkers.

Mr. Ashby: The hon. Gentleman failed the miners.

Mr. Haynes: No. I will educate the hon. Gentleman further. At the time that the board introduced that scheme, its aim was for 250 million tonnes a year. The board and the coal industry were expanding.

Mr. Ashby: Why did not the hon. Gentleman look after them?

Mr. Haynes: I am satisfied with what my hon. Friend said, because he has had experience on the administration side of the concessionary coal scheme.

Mr. Ashby: The hon. Gentleman was on the management side.

Mr. Haynes: I wish that the hon. Gentleman would close his mouth. I happen to have had 35 years' experience underground and was a recipient of concessionary fuel, and, like every other man in the industry, I made my contribution when we had a National Coal Board scheme.
The Government are conning the mining industry about redundancy. The people who have left the industry have had a raw deal, and the people who leave the industry through redundancy in the future will be even worse off. We have an organisation called British Coal Enterprise, whose chairman is Merrick Spanton. He used to be the director of the north Nottinghamshire area of the NCB. The east midlands group of mining Members summoned him upstairs to a Committee Room to discuss redundancies and redundancy pay. British Coal Enterprise was set up to provide work.
I remember my hon. Friend the Member for Bolsover challenging the Secretary of State at the Dispatch Box on the subject, because the Secretary of State said that British Coal Enterprise had created 40,000 jobs. When we summoned Merrick Spanton, my hon. Friend the Member for Bolsover chaired the meeting, and he gave Merrick Spanton a rough ride. As a result, it became clear that his organisation had not created 40,000 jobs. He said upstairs that there was potential for 40,000 jobs. We got an untruth from the Dispatch Box and the truth upstairs.
People who are made redundant are encouraged to go to exhibitions and seminars with a view to getting a job outside the industry. Retraining, they call it. The Government are all for it. After they have read all the literature and gone to the seminars, however, when they apply to go on a training scheme, they are told, "Sorry. You have to be assured of a job somewhere before you can go on the training scheme." These people are being conned into taking redundancy. The Government are preparing the way for privatisation. That means further pit closures. They are encouraging people to take redundancy and leave their jobs.
I know chappies in my constituency who have accepted redundancy at 30—and they cannot get another job. They are being conned. They are told that they can get another job outside mining after retraining, but the Government have moved the goalposts and when they apply to go on a training scheme they are told that they must have a guaranteed job to go to.
I have had people come to me in my constituency because the scheme is a fraud. It is the Government's way of reducing manpower and closing pits. They will keep open only those which are making a profit—some make substantial profits—so that the pockets of a few rich people can be filled, once again. That is the Government's policy with other industries as well. I felt that I had to make the point that the scheme is a con trick. I hope that the Minister will give us some sensible answers.

Mr. Matthew Taylor: I do not intend to delay the House as I know others wish to speak on behalf of their constituents.
Nobody would want to oppose the order—the Minister said that he hoped it was fair—but I wish that we had similar schemes to help tin miners in my part of the country. They have suffered similar problems. Coal miners have had a better deal from the Government.
I should like to draw the Minister's attention to the apparent contradictions and problems with retraining and the difficulties for those who have taken cash in lieu of concessionary fuel.
I hope that the Minister will also remember the words of the hon. Member for Pudsey (Sir G. Shaw) who, in 1984, as Under-Secretary of State for Energy, described the change in orders at that time as being designed to create in a humane and civilised way an effective and viable industry that is capable of offering secure employment in the longer term. Most of that does not seem to have happened. There have been too many job losses, and too many people hit by the Government's policies.
I hope that the House will bear in mind that schemes such as this are no substitute for real jobs for people in the industry. They offer nothing to up and coming generations who will have to search for work in areas where unemployment at present is 30 per cent. higher than elsewhere in the country.
We note that for those who are unemployed and those who have accepted redundancy the various schemes to help them to get back to work are not always quite what they appear to be. The contradictions between RMPS and retraining have been highlighted. Perhaps the Minister will forgive me if I raise another particular case in this connection.
At the moment an exhibition, organised by British Coal, is taking place at Carcroft colliery, Doncaster. Ex-mineworkers are to be offered jobs, but there are two apparent catches. The first is that only ex-mineworkers who were made redundant in the last year are eligible. The second is that the jobs being offered have not been created, which was the original brief. I understand that the agency involved has phoned all the local companies and got the pick of vacancies for ex-mineworkers, leaving other unemployed members of the local community and those mineworkers who have been unemployed for over a year no opportunity to apply.
If that is the case—I hope that the Minister, if he cannot comment tonight, will let me have his comments on another occasion—it would seem that this is simply trading jobs: offering them to some at the expense of others, and excluding some to the benefit of others. Again, that does not seem to be an adequate response to the difficulties of people in those communities. I know it is not strictly on the point being debated, but this is an opportunity to raise it and I hope that the Minister will respond.
Nobody will divide the House on the order. I am sure that there will be no difficulty in getting it agreed to. But I say again to the House that this is not the answer to the problems; it is simply a way of mitigating the worst of the problems for a relatively small number.

Mr. Gerry Steinberg: I welcome the order brought in this evening. I only wish that the Government had gone slightly further in the changes.
My constituency was a coal-mining constituency until all the pits were closed. However, I still have many


constituents who travel out of the area to the east coast pits. But, more important, many ex-miners, either retired or made redundant, live in my constituency. Even more important, perhaps, there are many miners' widows residing in the constituency.
A major problem has arisen in Durham, and I think throughout the rest of the country where there are redundant or retired miners, because of the major change in the housing benefit system regarding concessionary coal payments. Local authorities can no longer ignore the payment of cash coal allowances for housing benefit purposes in order to create an equitable situation between tenants who receive coal and those who receive a cash payment in lieu of coal. In the past this decision had been left to the discretion of each local authority, but after April this year it changed.
Durham, I am proud to say, is a caring Labour local authority, and it has exercised this discretion in favour of its ex-miner tenants. But Durham city council can no longer ignore this payment, because of the new regulations, and reluctantly it has to assess the cash payment in lieu of coal for housing benefit purposes.
Cash payments in lieu of coal allowances are paid in different amounts, depending upon the size of the property, and invariably they are made only to those people who, through no fault of their own, must live in houses that have not got solid fuel heating. For example, people may move into bungalows with gas-fired heating because they can no longer cope with a solid fuel open or closed fire.
There is an obvious unfairness in the system of assessment for housing benefit because tenants, regardless of whether they receive fuel or cash, must heat their homes. The dogged insistence that all cash received must be assessed for housing benefit purposes means that while the present taper operates, people receiving coal allowances in cash have their rents increased by about 85 per cent. of the cash payment in lieu of coal.
Consider what has happened in my constituency. I am sure that these examples hold good in many areas where there are miners or widows of miners. I know of two widows, one aged 76 and the other 86, who, prior to the changes in April, were paying £9 a week rent. Now their rent is £16. Another widow aged 81 has seen her rent increase from £11·90 pre-April to £19·99 today. These people have no savings, and their income is basically £44 a week pension, £36 a month NCB pension and a coal allowance in cash of £4·50 a week. 'Therefore, they have about £57 a week on which to live. The Government are asking them to pay, on average, £8 a week more in rent because they receive cash to the value of £4·50 a week. That is unfair, unjust and uncaring. How on earth can one try to explain to anybody, let alone an 80-year-old widow, the unfairness of that? The husbands of these widows spent a lifetime in the pits. The least we should do is to recognise their sacrifice.
The Minister, in a letter some months ago, told me:
The disregard of concessionary coal recognises the strength of the tradition in coal working areas that coal be given to colliery staff".
Be it coal or cash, the payment is made for exactly the same reason—to recognise
the strength of the tradition in coal working areas".

If local authorities wish to exercise discretion in this matter by continuing to ignore the cash in lieu of coal in assessing housing benefit, they should be allowed to do that, remembering that they do so at their own cost.
The Government will say that transitional help is on the way. Indeed, we have been assured that in some cases this will occur within the coming three months. But that is not good enough. Old people affected by these changes are worried to death and are finding it difficult to survive the huge increases in rent that 'they are having to pay. For those living on £57 a week, paying an extra £8 a week makes life unbearable. Many old folk in my constituency—I am sure the same applies in many other areas—are becoming desperate.
I appeal to the Minister to make representations to his colleagues in Government to examine this anomaly and to return to the pre-April situation of cash in lieu of the coal allowance.

Mr. Eric Illsley: I wish to clarify a few points that were made by the hon. Members for Amber Valley (Mr. Oppenheim) and for Leicestershire, North-West (Mr. Ashby). Had the hon. Member for Amber Valley heeded the remarks that were being made by some of my hon. Friends while he was speaking, he might have discovered that there was considerable sympathy on these Benches for his argument. We, too, have constituents who were made redundant between 1968 and 1971 and who receive very small sums of cash and no concessionary fuel. The hon. Member for Amber Valley did not realise that the National Union of Mineworkers, neither then nor since, had any input into any redundant mineworkers payment scheme brought in by the Government. There have never been negotiations with the NUM on any schemes. The schemes have simply been implemented.
The hon. Member should also remember that between 1968 and 1971 the NUM included as a constituent organisation the Nottinghamshire branch. He said that perhaps the Union of Democratic Mineworkers could negotiate retrospective coal allowances for the men who were made redundant then. He should realise that they were part of the union that he is accusing of having failed them. It would be good if the Minister were to announce that retrospective coal allowances could be given to the men who were made redundant between 1968 and 1971. At that time most of them were aged at least 60, so there are few of them still around and the cost to British Coal or to the Government would be small.
Another fact that the hon. Member for Amber Valley should know is that over the last few years British Coal has been attempting to buy out concessionary fuel allowances for mineworkers. Even since the strike British Coal has been considering ways in which it could give cash payments to redundant mineworkers to relieve itself of the responsibility of giving concessionary fuel.
The hon. Member for Amber Valley should note the point made by the hon. Member for Sherwood (Mr. Stewart). In 1968 the NUM tried to persuade men being made redundant not to accept the terms on offer because they did not include concessionary fuel. Since then we have always canvassed strongly against any mineworker accepting redundancy terms which did not protect his fuel rights. But, as has been pointed out, even then the scheme was voluntary and the men accepted it.

Mr. Dennis Skinner: Some of the issues which have been raised have been cleared up by my hon. Friend the Member for Barnsley, Central (Mr. Illsley), who has been employed by the NUM to look after some of the areas. He made the point that there was no national agreement at the time these people were made redundant between 1968 and 1971. There were local schemes based mainly on the private ownership before nationalisation. When nationalisation took place, the coal schemes were carried over under the legislation. It meant that there were large variations between coalfields.
Neither Lancashire nor Durham had the kind of coal schemes that we had in Nottinghamshire. In the area of Derbyshire which was affected by the closure programme in the middle 1960s a significant number of men were involved. Michael McGuire, who was the Member for Ince, used to raise these matters in the early 1970s, as I did. We pleaded with successive Governments to do something. We are not making a party political point. There is only a handful of men left in each of the coalfields. It is time justice was done.

Mr. Eadie: It is a question of trying to put the record straight on the general evolution of concessionary coal. It is more than 50 years ago that I started as a boy in the mining industry. I can remember when we got public ownership and formed the one national union. We never had a National Union of Mineworkers before. Some areas did not have concessionary coal at all and the only concession that the miners had was that they were allowed to go to the bins in the pit and pick what they could from the pit. There was no concessionary coal.
Incidentally, compared with other areas Nottingham did not have a good record on concessionary coal, although arrangements varied from pit to pit. I simply wanted to set concessionary coal in its historical context. It was born as a consequence of the creation of the National Union of Mineworkers and of the negotiations between the NUM and the National Coal Board. My hon. Friend the Member for Bolsover (Mr. Skinner) will agree that the NUM negotiated very successfully; the miners did not have an industrial strike between 1926 and 1972.

Mr. Skinner: My hon. Friend is right. As I said earlier, the arrangements were based on those under private ownership and prior to nationalisation; they were carried over. It was not until we got a national agreement that we were able to sort out the matter. I remember how in Derbyshire the miners could allocate only about two or three tonnes per annum to the widows because with the number of people out of work there were many more beneficiaries than miners contributing.
As hon. Members on both sides have said, we are talking about only a few hundred people in the whole British coalfield; it is no more than that. Many of them are widows and all of them are more than 80 years of age. It is high time that somebody did something about the problem. If the Minister could take that message back to the Government, he would be doing a service, and it would not cost a great deal. People leaving the mining industry, having worked in it for only 20 years and sometimes less, get concessionary coal. It is a justified complaint, which could be dealt with at very little cost.
I want to amplify the point made by my hon. Friend the Member for City of Durham (Mr. Steinberg) about money

in lieu of concessionary coal. I hope that the Minister will pass on to his hon. Friends in the appropriate Department our view that it is unjust that, while some miners' widows burn coal and thereby receive payment in kind, others living in the same street, who have had to move to bungalows with gas-fired heating because they can no longer lift buckets of coal, end up losing £7 a week. It cannot be fair that those people should be penalised in their rent. The transitional payment will not help. The transitional payment agreed in the House and arising from the housing benefit and income support changes will not affect those who have lost roughly £7 a week—those who get money in lieu of concessionary coal. It is wrong that those getting the coal should not be penalised whereas those who get the money are affected in the amount of rent that they pay. That matter wants looking into.
My hon. Friend the Member for Ashfield (Mr. Haynes) talked about British Coal Enterprise. I have said before —it ought to be said over and over again—that British Coal Enterprise is claiming credit for jobs that it has not created. It is claiming jobs that have been created by the special development agencies in Scotland and elsewhere and by local authorities. It claims to have created jobs whereas workshops have simply been transferred from the public sector, the National Coal Board, straight to private enterprise. It says that that is a part of the many thousands of jobs that it has created. There are no two ways about it: £30 million has been expended by British Coal Enterprise and if local authorities spent £30 million in junketing they would certainly be surcharged for the money that they had spent without creating the jobs that they claimed to have created.
I hope that the Minister will deal with the two questions that we have raised about elderly people and concessionary coal. It will not be before time.

Mr. Andy Stewart: I wish to say a few words about cash in lieu of coal affecting housing benefit. I still have in my constituency a caring local authority—Newark and Sherwood —which, like that mentioned by the hon. Member for the City of Durham (Mr. Steinberg), disregarded cash in lieu of coal until the law was changed. I must tell my hon. Friend the Minister that Labour-controlled Ashfield district council stopped that practice two years ago. That ought to be known, bearing in mind that the hon. Member for Ashfield (Mr. Haynes) said that it was stopped on 11 April, which is not true.
It is unfair to include cash in lieu of coal in calculating a claimant's income. During the war, one was drafted either into the Army or into the coal industry. The only income that is disregarded today is the war widow's pension. If one member of a family went into the coal industry, his widow's cash in lieu is not disregarded, whereas the widow's pension of another member who joined the services and was subsequently killed is disregarded. That is grossly unfair, given that both were effectively drafted.
I know that my hon. Friend cannot do anything, but hon. Members representing mining constituencies raised that anomaly in the House two years ago, pointing out how it would affect their constituents. In view of what has been said, perhaps my hon. Friend will convey our views to the appropriate Department.

Mr. Allen McKay: I add my voice to those of hon. Members who have spoken about cash in lieu of coal. It is disgraceful when—as may have been the case in the example given earlier—auditors tell councillors, "If you don't start treating coal as an emolument, you will be surcharged." That is what happened to my authority. They kept the scheme going right up to the hilt until they were threatened by a surcharge and other fearful consequences. It is time that the Government recognised that that situation exists and put it right. Cash in lieu of coal is just that, and it should not be taken into the calculation for housing benefit.
I shall refer briefly to the coal agreement. It is true that some received coal and some did not. At first, I received 15 tonnes a year whereas somebody down the road received only 12 tonnes. Some widows received coal and some did not, as did miners who were injured in the pits. In the 1960s, the National Union of Mineworkers, quite rightly, recognised that there should be a levelling off. My allowance of 15 tonnes fell to 12 tonnes, then to 10 tonnes and after that to 8 tonnes. That was a voluntary scheme by members of the union and those who worked in the coal industry, under which there was equalisation across the board.
At the time of that agreement, nobody worried about redundancies, because they were unheard of. The only concern at that time was the demand for an increase from 200 million tonnes of coal a year to 250 million tonnes. That was the era of Lord Robens. When men were made redundant, the agreement under which that was done did not take into account what was really happening.
In some cases, the men were misled. I could never prove that. If that could have been proved, matters would have been different. However, from my own investigations my belief is that those men were misled. They would not have left the industry had they known that they were going to lose their coal. There are very few of them left. It would not hurt British Coal to establish how many of them would come back into benefit and how much that would cost. British Coal has a moral obligation to put right something that went seriously wrong.

Mr. Michael Spicer: This has been a thoughtful and thought-provoking debate. The temperature rose a bit when the hon. Member for Ashfield (Mr. Haynes) spoke, but that is not unusual.
It has been recognised that the RMPS, which the order puts on a fairer basis, is a generous one. The hon. Member for Truro (Mr. Taylor), who kindly informed me that he would be unable to stay for the entire debate, said that he would give his right arm, or his shirt, if the mining interests that he represents could benefit from such a scheme. I am sure that those representing other industries would like similar arrangements. The House has given welcome recognition to the fact that the RMPS is generous. My hon. Friend the Member for Amber Valley (Mr. Oppenheim) said that some might consider that the RMPS and the order were excessively generous, and spoke about back payment for the 1960s.
The major element of the order ensures that the terms on which people left the industry, as part of the restructuring process, are honoured. There is nothing particularly generous about that. Some time ago it was

agreed that there should be generous redundancy terms in the interests of making the coal industry efficient. The order ensures that those obligations are honoured.
The hon. Member for Midlothian (Mr. Eadie) asked why licensed mines do not fall under the terms of the RMPS. The RMPS was available to licensed mines under the statute, but the RMPS finished in March 1987. Current redundancies in British Coal are eligible for restructuring grant, which is not available for licensed mines. The restructuring grant which the Government are generously giving to British Coal is part of our strategy of making British Coal more efficient and better able to pay its way than in the past. That policy is paying off and this year. as the hon. Gentleman will be aware, British Coal is planning to break even. The restructuring grant will have played a part in that success.
The hon. Member for Midlothian also asked about section 37 of the Social Security Act 1985. It is a complicated issue, and he asked a complicated question, but I believe he thought that section 37 and article 5(6)(iii) of the order were a minus, not a plus. The main thing that we are trying to avoid is double deductions. We have social legislation and RMPS-related legislation, and unless the amending order is passed double deductions will be made. I trust that I have understood the hon. Gentleman, but if not, I shall write to him.
The main theme of Opposition speeches— my hon. Friend the Member for Sherwood (Mr. Stewart) also mentioned it— has been that of concessionary coal and cash in lieu. I accept the request of the hon. Member for Bolsover (Mr. Skinner) and others, and will raise the matter again with my right hon. Friend the Secretary of State for Social Services. I listened to the strong feelings expressed on both sides about the inequity, but I cannot give any further assurances, because this is not ultimately my responsibility. I shall, however, convey the ably put coherent points on that.
Retraining affects younger people on the whole, although the hon. Member for Rother Valley (Mr. Barron) mentioned an older person. I should like to hear of specific cases where retraining has been deterred.

Mr. Barron: It was not retraining, but the restart scheme, under which people unemployed for more than six months have to go to a local office to fill in a questionnaire, that I was talking about.

Mr. Spicer: I shall certainly make that point to my right hon. Friend the Secretary of State for Employment, as that matter comes under employment legislation and is not for my Department.

Mr. Haynes: I can certainly give the Minister two examples, one of which relates to a 41-year-old.

Mr. Spicer: The RMPS and redundancy schemes now relate to younger people than they did originally. I am interested to hear of specific cases, which I shall look into if the hon. Gentleman will send them to me. I should like to see the details of the problem and see whether anything can be done.
My hon. Friend the Member for Amber Valley has been assiduous and persistent about the various schemes not applying to those who left in the 1960s. Several hon. Members have said that there were numerous local


schemes and agreements at that time, and many anomalies. The purpose of bringing everything together in the 1970s was to deal with those anomalies.
Whenever new benefits are introduced, no matter what the legislation, the problem is always where to draw the line. We had to ask ourselves whether we could, at an acceptable cost, delve into history and track down the few people who had been made redundant under these terms, whether it would be equitable if we missed some out, and whether the exercise was feasible. Despite the great efforts of my hon. Friend and others, our conclusion is that the line has been drawn for some time now and ——

Mr. Ashby: I understand my hon. Friend's position and that a line must be drawn, but will he undertake to look again at that line and see whether it can be redrawn in a different position to deal with this anomaly and unfairness?

Mr. Spicer: I shall look again at the argument, but it would be administratively costly and there would be the difficulty of tracking people down. I suspect that that will be difficult, but I shall consider the argument again. Sometimes such an argument can be stated too blandly, but I shall re-examine this one to see whether it stands the test of analysis. I am advised, however, that it would be extremely difficult to ensure fairness, given the great complexity and diversity of the previous arrangements.
I think that I have covered most of the points that have been raised. If not, I shall be happy to write to hon. Members. The Government believe that the RMPS is fair. Indeed, some might think it over-fair. I hope the House will agree that the matter needed to be put on a sound footing to enable people being made redundant from the industry to receive the benefits to which they were told they were entitled. That is what the order does. I am grateful for the support expressed for it on both sides of the House.

Question put and agreed to.

Resolved,
That the draft Redundant Mineworkers and Concessionary Coal (Payments Schemes) (Amendment) Order 1988, which was laid before this House on 5th July 1988, be approved.

Orders of the Day — Armed Forces (Discipline)

The Parliamentary Under-Secretary of State for the Armed Forces (Mr. Roger Freeman): I beg to move,
That the draft Army, Air Force and Naval Discipline Acts (Continuation) Order 1988, which was laid before this House on 17th June 1988, be approved.
The purpose of the order is to continue in force for a further year the Army and Air Force Acts 1955 and the Naval Discipline Act 1957, which together provide the basis for the disciplinary arrangements in the three services. The concept of annual parliamentary approval for the special legal position of service men and women is a long-established one in British constitutional practice. Indeed, it stems ultimately from the 1689 Bill of Rights, which prohibited the raising or maintenance of a standing army in the realm in time of peace without the consent of Parliament. Every fifth year the opportunity is taken to review in depth the needs of the service disciplinary systems and an Armed Forces Bill is presented proposing such amendments to those systems as are considered necessary. As hon. Members will recall, the last such Act was passed in 1986.
The legal position of service personnel is in some respects unique. They are subject to service discipline as well as to the ordinary law of the land, and their individual rights as citizens must be respected within the constraints necessarily imposed by service discipline.
I want to take this opportunity to bring the House up to date briefly on some areas in which this balance has had to be considered. In its report, the Select Committee on the Armed Forces Bill 1986 suggested that accused persons in the Army and Royal Air Force should be allowed the assistance of an accused's friend at summary proceedings, in the same way as in the Royal Navy. In the light of that recommendation, we have set in hand a wider review of summary proceedings, including proposals for providing assistance to the accused. The outcome will be included in our proposals for the next Armed Forces Bill.
A fair and equitable system of discipline is essential to good morale in the services, which in turn helps us to recruit and train good quality personnel. The current manning position in the armed forces is broadly satisfactory. There are shortages in certain specialist areas, mainly those in which there are national shortages, but those shortfalls are not significant enough to prevent the services from carrying out their operational roles. The House will be aware of the difficulties that we face because of demographic trends and increased competition from other sectors of an expanding economy. In common with some of our NATO allies, we are considering ways of meeting these challenges. Never has it been more important for our armed forces to offer the right conditions of service to their members.
It is right, therefore, that recent allegations of bullying in the armed forces should have attracted the concern that they have. Since January 1986, 45 such allegations have been substantiated and resulted in disciplinary action. Bullying has no place in the armed forces. The serious view that we take has been reflected both in the sentences awarded to those found responsible and in the comprehensive package of measures being implemented, which I am confident will help to deal with the problem.
Let me deal finally with a subject that graphically illustrates the fact that—for good or ill—the services are part of society. The Ministry of Defence recognised the seriousness of AIDS at an early stage, and it has taken a full part in the AIDS education campaign. Service units going abroad are briefed on AIDS as well as other health hazards, and individuals considering themselves at risk are encouraged to undergo voluntary screening. In short, AIDS policy for the armed services is consistent with that adopted nationally.
Let me draw the attention of the House to a pamphlet that we have recently produced called "The Armed Forces: Your Rights and Responsibilities." It sets out in straightforward language the rights and responsibilities of service men and women. A copy will be given to all new recruits to the armed forces and will, I hope, help them to understand the services' disciplinary system. I shall place a copy in the Library, and if any hon. Member is interested in receiving a copy I shall be pleased to send him a copy directly. It is a brand-new leaflet, and it covers rights in regard to injustice or ill-treatment, equal opportunity of employment in the armed forces, voting and injury on duty. In regard to responsibilities it deals with the service discipline Acts, drug abuse and alcohol abuse. I hope that it will be of interest, use and benefit not only to recruits but to their parents.
The service disciplinary system that will be continued by the order plays an essential part in maintaining the extremely high standards displayed by the services, both in peace time and in fighting roles. I am pleased to take this opportunity to pay wholehearted tribute to the skill and dedication of our armed forces, and I invite the House to approve the order.

Mr. Sean Hughes: In view of the hour, I shall not venture down the road of historical reference with which the Minister opened his remarks, much though I might be inclined to do so. We experienced the niceties of the 1688 debate recently, and, although as a Catholic I may have my own views about just how glorious that revolution was, I shall refrain from exploring the subject tonight.
Let me say in my immediate response to the Minister that he should perhaps consider making the leaflet for recruits available to all service personnel rather than merely to recruits. Let me also say that Opposition Members hope that an indication at least of the contents of the Armed Services Bill will be available in time for the estimates debate in the autumn.
In the past, our debates have concerned themselves with the generalities of discipline and morale in the armed forces rather than merely with the technicalities of the Acts whose continuation is the subject of the order. Hon. Members have concerned themselves with what an hon. Member referred to last year as the niggles that we all hear whenever we visit a unit. I believe that that is right. Morale and discipline are composed of the minutiae of life in the services, and it is therefore incumbent on us to discuss them.
I join the Minister in his praise for the men and women who serve in our armed forces. It is easy to praise them at times of national crisis, and to forget that in the humdrum preparation for crisis they forgo much of the personal freedom which we as civilians enjoy and exercise. It was

right that the Select Committee of 1976 refused to give up the annual affirmative orders when such a proposal was considered.
As the Minister pointed out, one aspect of life in the armed forces that has been of concern to hon. Members is that of bullying. Nothing could more sap morale and diminish discipline than such behaviour. During the Army debate on 26 January, the Minister asserted his belief that the problem of bullying and ill treatment was riot widespread. I simply do not know, nor can anyone know, the incidence of bullying in the armed forces. None of us would want to stand accused of either exaggerating or understating the problem. The Minister devoted a considerable part of his speech to the Government's response to some of the bizarre examples of bullying and, to that end, he outlined a programme on which he hoped to make rapid progress. Perhaps he can inform the House tonight whether it is now possible to report any measurable progress on that matter.
There were six items in that programme. I should like to draw the House's attention to two of them. Although Opposition Members welcome the fact that he Government are taking the question of bullying seriously, we remain concerned about the first suggestion—that there should be a more thorough screening at the recruiting and entry stage of young men who, as the Minister put it,
may not be robust enough to cope with the toughness of military training"—[Official Report, 26 January 1988; Vol. 126, c. 257–8.]
As the item under discussion was bullying, that appeared to equate some aspects of bullying with tough military training. It was an unfortunate use of words which I am sure the Minister did not intend to lead to misinterpretation. As this is the first opportunity to put the record right, I hope that the Minister will do so when he replies.
The final proposal in the Minister's six-point plan was a formal ban on harmful initiation ceremonies. Clearly the experience of such degrading ceremonies is hardly conducive to good discipline in the armed forces. Perhaps the Minister can tell us how such a ban has been enforced and whether there has been any measurable effect in the past six months.
One other matter that has given cause for concern of late is that of racism in the armed forces. In an earlier debate, my hon. Friend the Member for Tottenham (Mr. Grant) asked soldiers to write to him about individual cases of racism. The Minister replied that that was the wrong advice and that it would be more effective and in the best interests of British soldiers to take up such allegations with their commanding officers. This is an extremely sensitive matter, and I must be honest with the House and say that in the past 12 months only one allegation of racism has been drawn to my attention but, ominously, it was withdrawn on the ground that identifying the individual or regiment might have repercussions and that it would have been impossible to prove motive. I do not try to concoct any theory on that matter. I do not know the extent of the problem. However, I know that hon. Members and journalists have identified the matter as one of real concern and I hope that the Minister will assure the House that he continues to monitor the matter closely.
Another item of concern that has been expressed to me both in conversation and correspondence has been the question of private contractors at barracks, which affects


morale and discipline. For the record, I should add that the incidents to which I refer concern private contracts at Army institutions, although common sense would suggest that such incidents must be happening generally throughout the services if they are happening in one particular service. The complaints that I have received had not been limited to private soldiers.
I understand that, as a result of privatisation, various contracts are now being awarded on the basis of competitive tendering to cover such services as gardening, cleaning and catering. The substance of the complaints is that the contractors sometimes—I shall not over-egg the pudding by saying often—fail to deliver the full service and, as a result, the commanding officer must order his men to finish off the job.
It has been suggested to me that in some instances the work of the private contractor has been so unsatisfactory that the commanding officer has had to order his men to provide the complete service again. I tabled a question to the Minister earlier in the year and his reply informed me that there have been some such instances but they have been infrequent and confined generally to the early stages of contracts. I think that the problem is greater than that and I hope that the Minister will give it his attention. The use of young soldiers to carry out work that has been contracted out does not lead to good morale or good discipline.
In civilian life, expectation of pension is considered a legitimate aspect of working conditions, and with that goes the question of how we treat the widows of those so employed. If discipline is dependent on morale and not only on punishment, the morale of service men and women cannot but be affected by how we treat the widows of those who have served their country in the past. The Minister replied to a debate on this subject shortly before the Christmas recess. I hope that the Government will be prepared to reconsider their position on war widows' pensions. The problem has been identified in two early-day motions.
I ask the Minister to explain the use of section 24 of the Armed Forces Act 1971 in respect of unauthorised disclosure of information. I apologise for not giving him notice of my question. Section 24 provides the following provision to substitute for section 60 of the Army Act 1955:
It shall be a defence for a person charged with an offence under this section that he did not know and had no reasonable cause to believe that the information disclosed related to a matter upon which information would or might be directly or indirectly useful to an enemy.
Under the proposed reform of section 2 of the Official Secrets Act 1911, the Government have recommended that
it should not be necessary for the prosecution to adduce evidence of the likely damage to the operation of the security or intelligence services when information relating to security or intelligence has been disclosed by a member or former member of one of those services.
Let me suppose that someone who is serving in one of the military intelligence agencies discloses information about his job that he knows will not be of use to the enemy but will reveal, for instance, that a defence contractor overcharged the agency. He could not be prosecuted under section 24 of the Armed Forces Act 1971. Under the new

proposals for the reform of the Official Secrets Act, however, he could be prosecuted and would have no defence in law. The law would then be made to look an ass.
I ask the Minister to tell us whether section 24 will be amended so that it is compatible with the proposals in the White Paper on the Official Secrets Act. I hope, Mr. Deputy Speaker, that the Minister will catch your eye and will be able to respond to the issues that I and others have raised during this brief debate.

Dr. Alan Glyn: I endorse everything that my hon. Friend the Minister has said in paying tribute to the armed forces in general and to their high standard of discipline.
Discipline rests with the leadership of the officers and with providing the men with the right conditions, and in Windsor there is a difficulty. When the Victoria barracks were demolished, a smart guard continued to go to the castle, and the public admire it. They do not know, however, what the men have to go through. They are bussed from Hounslow, Chelsea or from wherever they can be obtained. They then have to go to Combermere barracks, where they put on their uniforms, which are carried separately. That is extremely difficult. The tunics are very expensive. As everyone knows, the entire uniform is extremely expensive. The uniforms are carried in the bus or on a lorry to the barracks, where two rooms have been provided for the men to change in. They then have to be bussed back to the royal mews. That causes extreme difficulty for the men who have to parade in public. If I were one of those men, I should be extremely worried about whether I could make the change to full dress under those conditions. It is wrong that that should continue.
That situation has existed since 1980. I make no apology for the fact that since 6 June 1980 I have been pressing successive Ministers to do something about it. The last of the Foot Guards left in May. On 26 January, at column 259 of Hansard, my hon. Friend the Under-Secretary of State for the Armed Forces was most sympathetic.
There are two reasons for my request. We need another barrack in London and in Windsor. That is not entirely selfish, because I am led to understand that another barrack is required in the London district. The House may not be aware that Windsor is technically under the London district. It is also a fact that another barrack is required. The inconvenience to the men is important, but there is also the more important point that there is a barrack there that has been lying idle for eight and a half years.
I do not blame any Minister who has had responsibility for the armed forces. Each successive Minister gave me undertakings, and I was told that the barrack would be ready long before now. The empty site has now been cleared. I know that there were demolition difficulties, but they have been dealt with and I look forward to the rebuilding of the barrack.
After all, as I have said in previous debates, we are a garrison town. The castle has to be guarded by Foot Guards, and it is up to us to make sure that the conditions under which those men guard it are as comfortable as possible.
At the same time, we need another barrack in the London district. I am grateful to my hon. Friend the


Minister for what he said in column 259 of Hansardon 26 January, and I look forward to working with him for the rebuilding of Victoria barracks at an early date.

Mr. Harry Cohen: Sometimes I think that it is Ministers who should be disciplined for the waste of money in many areas of defence expenditure. For example, the Minister's predecessor, the right hon. Member for Tonbridge and Malting (Mr. Stanley), reported to the House that a constituent of my hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry) had not been strip-searched, and now it has been reported that she was. The Ministry of Defence has had to pay damages. The right hon. Member for Tonbridge and Malling has still not apologised for misleading the House. Perhaps he should be disciplined by the House if he does not.
Similarly, the Minister who went ahead with Trident in the first place should be disciplined; but other Ministers have misled the House over the figures for the Trident programme. They have not told the House that the Trident programme does not include the capital works, which the Select Committee on Public Accounts has said could add another £1 billion-plus to the cost of the work.
Perhaps we are discussing the wrong kind of discipline and it should be the Ministers who are disciplined. I hope that we shall do that at the next general election, when they will be duly put in their place, which will not he in Government.
I welcome the leaflet announced by the Minister and I shall examine it closely. It seems as though it will be a welcome publication and extremely helpful to the armed forces.
I echo the point made by my hon. Friend the Member for Knowsley, South (Mr. Hughes) about bullying. I was most concerned when the Minister used that phrase about those who were not robust enough for military training and having to sort them out. It struck me at the time that the Government and their advisers were putting all the blame on the victim instead of on the bully. I hope that the Minister will have second thoughts about that.
I shall be interested to see what the leaflet says about equal opportunities. When I asked the Prime Minister recently about the security services and equal opportunities policy, she said that there was not one—it did not apply to the security services and the armed forces. I do not think that there can be any excuse for not having a proper equal opportunities policy throughout the armed forces. I want to see extensive monitoring and action on it to ensure that it is carried out. There are certainly not very many—certainly not enough—of our black and ethnic minority citizens in senior positions in the armed forces. The implication of the Prime Minister's answer was that they cannot be trusted to hold senior possitions. That is a travesty of the truth, and in many respects it is discrimination against them. It was Prince Charles who first called for the Guards to have a black guardsman. A great deal needs to be done to get proper equal opportunities.
The Minister referred to AIDS in the armed forces, but it is also a serious problem throughout society. There was a television programme recently, mainly concerned with the United States forces in Thailand, which showed that the Thai Government were most irresponsible in relation to visiting troops. That might apply, too, to countries that

our troops visit. For example, in some of the African countries as many as 90 per cent. of prostitutes have the HIV virus. If our soldiers frequent such establishments, perhaps in a fit of drunkenness or a deliberate act on their part, they take a grave—grave is the right word in this context
—risk.
The Minister should not only promote health education, which is vital, but put pressure on the Governments of the countries which our troops visit to behave responsibly and clean up those areas where AIDS can be spread. That is a serious issue to be dealt with.
The Government should be examining ways of making it easy for those in the armed forces who contract AIDS to acknowledge it, leave the armed forces and receive proper care. They need to be able to do that without fear, without shame and stigma and, especially, without severe financial hardship. If that does not happen, they will stay in the armed forces and try to cover it up and suffer.
I have argued when we have had similar debates before that there should not be a ;separate law for the military. The death penalty is still applicable in the armed forces. The Acts came into force in 1955 when we still had the death sentence for civilians, so it is understandable that it should have been provided, but we have since got rid of it for civilians and I believe that it should be got rid of for the armed forces. I know that it is not used, but it could be, and it should be taken off the statute book.
It is for the Minister to argue the case for keeping the death sentence, especially when we have had debate after debate, at the end of which the House has decided that it does not want the death penalty for civilians. State murder is regarded as morally unacceptable, and in my view the same view should apply in the armed forces. It is obvious that no such change can be made this year, but I hope that the Minister will at some stage have the courage to abolish the death penalty.

Mr. John Gorst: I want to refer to one case, more in passing than in detail, because there are one or two points of principle which it is important to state now rather than to leave too late.
I refer to the case of the Life Guards Captain Simon Hayward, who was arrested in Sweden more than a year ago on charges of drug trafficking, and who is now serving a period of five years' imprisonment. To determine his future in the Army, I understand that it is necessary under the Queen's Regulations for the authorities to determine whether he has received a fair trial in the foreign country in which he has been sentenced. Only in the light of such inquiries will he be deprived of his commission.
I am absolutely satisfied that the procedures which I understand are taking their normal course will be handled most sympathetically and fairly, but I wish to urge on my hon. Friend the Minister the view that when the processes are completed the Ministry of Defence should completely ignore any possible repercussions on our diplomatic relations with Sweden.
In my view, and, I hope, in the view of all, the prime consideration should not be the expedient of whether a judgment hinders or helps our relations with another country, but whether justice has been done. In that context, I urge my hon. Friend that consideration of "fair" must be on our standards of the term and not those of another country, particularly if the standards, as I have


learned before, during and since Captain Hayward's trial, have been a matter of question not just by me—that is not important—or by other hon. Members, but in copious correspondence from the very country in which the trial took place. Therefore, I hope that it will be standards not just of natural justice, but of justice of the purest possible kind that will be applied when a decision is reached.
Secondly, I hope that, despite the fact that Captain Hayward has lodged an appeal with the European Court, whatever findings are arrived at here in this country will not necessarily be dependent upon what happens at the European Court of Human Rights, whether it finds in his favour or against him, although it is probable, if the case is considered to be admissible, that the ultimate result will be long delayed, if precedent is followed, and will not be forthcoming until he has served his sentence.
I believe that it is essential that it be recognised that the European Court examines whether an agreed code has been followed by a particular country and does not necessarily address itself to whether the verdict was a fair or an unfair one. We should make this decision on the basis of what we know of the proceedings at trial and appeal. I am quite satisfied in my mind that if the Ministry of Defence addresses itself to that and that alone the outcome will certainly be a fair consideration of Captain Hayward's case.
I do not seek from my hon. Friend either a reply or comment at this stage. I understand that it may be preferable to allow matters to take their course. However, I hope that my words will have some influence in ensuring that it is not diplomatic relations but justice that will eventually prevail in this matter.

Miss Ann Widdecombe: The hon. Member for Knowsley, South (Mr. Hughes) said something that I think would be echoed by both sides of the House—that high morale is fundamental to good discipline. Similarly, fundamental to high morale is the conviction on the part of serving officers and men that their families are well looked after and are integrated into the local community where they happen to be based. That is particularly important where regiments serve a substantial part of the year overseas.
It is a matter of concern to me, and indeed to my hon. Friend the Member for Mid-Kent (Mr. Rowe), who cannot be here to record his concern in person, that there is a question mark over the future accommodation of 36 Engineer Regiment, which has been based in Maidstone for many years. It is a feature of their service that, as sappers, they spend a substantial period each year abroad, away from their families. They have told me, and I am sure that it it true, that they are very satisfied with the facilities in Maidstone and with the relationship that they enjoy with the town. The town would echo those sentiments. They have said that when they are abroad they are satisfied that their families are integrated into the community, they are happy with the schooling opportunities for their children and they do not wish to break the connection between themselves and Maidstone.
I know that my hon. Friend will not be able tonight to pronounce, one way or the other, on what is to happen to 36 Engineer Regiment, but members of the regiment

believe that it is now being seriously considered that they should be moved from Maidstone and based instead on Thorney Island. That is not a proposition that fills either them or the town that they will be leaving with enthusiasm.
I ask the Minister for an assurance that full account will be taken in any decision of the established fact, well recognised in a recent report, that the welfare of families is fundamental to high morale and that that, rather than any consideration of value of site, will be the governing criterion in taking the decision. Otherwise, I fear not only for the morale of the 36 Engineer Regiment, but for recruitment potential and retention, and, in view of the expense of training engineers, retention is extremely important.

Mr. Freeman: This has been a brief, well-informed and constructive debate and I shall endeavour to cover the salient points raised by hon. Members.
The hon. Member for Knowsley, South (Mr. Hughes) gave me notice of some of the points that he raised, for which I thank him. He dealt with the leaflet being sent to service personnel. We have 300,000 service men and women. He put forward an interesting idea, which I will consider. The intention at present is to concentrate on recruits, and I feel sure he will agree that initially that is the correct focus. However, I will bear in mind his suggestion of a wider distribution.
The hon. Gentleman questioned me about the Armed Forces Bill. The inclusion of our proposals, following the review of summary proceedings, will not come until the Bill is produced, and that will not be until 1991 because it is a quinquennial review.
The hon. Gentleman asked what progress had been made on the subject of bullying. I refer him, and other hon. Members who have expressed interest in this subject, to the answer I gave on 7 June to the right hon. Member for Stoke-on-Trent, South (Mr. Ashley) in which I spelt out precisely what we had done since the announcement I made to the House in January. I referred to the steps that we had taken, and at this hour I will merely refer to that rather than go into the matter in detail.
I have covered the issues of the better medical screening of recruits and how we train and select instructors, the creation of 100 extra posts in the training establishments to provide better supervision of recruits, the creation of 92 extra posts for members of the WRVS, the way in which we are looking again at man management training for officers and NCOs and how the Army has taken steps to ban initiation ceremonies.
The hon. Member for Knowsley, South referred to racism. The results of the ethnic monitoring survey for the year to 31 March 1988 will be known towards the end of this year and a summary will be published in the Statement on the Defence Estimates next year.
The hon. Gentleman asked about private contractors. I am aware of his concern on that issue. I believe in this instance that trade unionists, the services and the Ministry of Defence all have a common cause in making sure that service personnel do not assist contractors in the fulfilment of their contractual obligations. Commands will be reminded that such assistance should not be given.
The hon. Gentleman asked about widows' pensions. This is a complicated issue. The so-called anomaly arises because the DHSS provides a war widow's pension to all


whose husbands were injured or who died at any stage of their careers; there is no time limit. Since 1973, when the provisions of the armed forces pension scheme were much improved, war widows generally receive a second, additional, pension from the armed forces contributory scheme, and that creates the so-called anomaly of those who were widowed before 1973. All I can say is that my ministerial colleagues in the DHSS are well aware of the points that he has raised, and both the DHSS and the Ministry of Defence have the matter under constant review. It is a matter of resources, as I am sure he appreciates. We are not ignorant of the problems.
Finally, the hon. Gentleman asked about unauthorised disclosure of information. I am advised that it would be for the prosecuting authorities in the circumstances of the particular case to decide under which statutory provision the proceedings should be instituted against a service man or woman accused of the unlawful disclosure of official information. Perhaps I might study in the Official Reportthe text of the hon. Gentleman's remarks. If I have to amplify what I have just said, I will do so in writing.
My hon. Friend the Member for Windsor and Maidenhead (Dr. Glyn) raised the subject of Victoria barracks. I am happy to repeat the assurance that I gave him in January, I believe, in the Army debate that I would visit Windsor with him on 1 September. I am happy to confirm that I will visit the site with him on 1 September. I hope to make an appropriate announcement.
I am grateful to the hon. Member for Leyton (Mr. Cohen) for his kind remarks about the leaflet. I hope that he still feels the same after he has read it.
The hon. Gentleman asked me to clarify, as did the hon. Member for Knowsley, South, my remarks about toughness and training being robust enough. There is no question of any equation between bullying and toughness in Army training. The two issues are different, but it remains the case that the expectations of young recruits are not always appropriate for joining a disciplined force. It is important for both individuals and the services that recruits should be mentally and physically attuned to the demands of the service which they are joining. I must reiterate that tough training does not and should not involve bullying. I hope that clarifies the position.
The death penalty, which is a very serious issue, was also raised by the hon. Member for Leyton. There are five serious offences involving positive acts of treachery which, under the service Discipline Acts, can carry the death penalty. That penalty is not mandatory for any of the offences, even though they are broadly equivalent to high treason, for which the death penalty is still mandatory.
Our policy is that the death penalty should never be applied in peacetime. Nevertheless, we see a clear need to retain the option of the death penalty for this small group of serious offences. That need was accepted in 1986 by the Select Committee on the Armed Forces Bill.
My hon. Friend the Member for Hendon, North (Mr. Gorst) referred to the case of Captain Hayward. My hon. Friend knows that the matter is with the chain of command in the Army. He would not expect me to comment on whether Captain Hayward should be asked to resign his commission because it is under review, but my hon. Friend's comments will have been noted.
My hon. Friend the Member for Maidstone (Miss Widdecombe) referred to 36 Engineer Regiment, a very fine regiment with a long and proud history of being based in Maidstone. If my hon. Friend is content, I should be happy to visit the regiment with her, perhaps after the recess, so that I may understand more fully the concerns that she has expressed, which will be appreciated by the regiment.
As I said at the outset, I am grateful for the opportunity to reply to the debate. I commend the order to the House.

Question put and agreed to.

Resolved,
That the draft Army, Air Force and Naval Discipline Acts (Continuation) Order 1988, which was laid before this House on 17th June 1988, be approved.

OFFICE COSTS ETC. ALLOWANCES

Resolved,
That, in the opinion of this House, the Resolution of 21st July 1987 (Office Costs etc. Allowances) should have effect in relation to Mr. David Blunketi as if for any year the limit on the office costs allowance was 2.57 times that determined in accordance with the said Resolution, instead of that prescribed in the Resolution of 16th December 1987.—[Mr. Peter Lloyd.]

STATUTORY INSTRUMENTS, &c.

Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &amp;c.).

AGRICULTURE

That the draft Farm Woodland Scheme 1988, which was laid before this House on 4th July 1988, be approved.

INTERNATIONAL IMMUNITIES AND PRIVILEGES

That the draft EUMETSAT (Immunities and Privileges) Order 1988, which was laid before this House on 28th June 1988, be approved.

That the draft EUTELSAT (Immunities and Privileges) Order 1988, which was laid before this House on 28th June 1988, be approved.—[Mr. Peter Lloyd.]

Question agreed to.

Orders of the Day — Bus Transport (London)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Peter Lloyd.]

Mr. John Fraser: If one asked anyone to give an impression of London at any time this century, he would be unlikely to omit the friendly image of the red London bus. It is almost as much an emblem of London as Tower bridge or the Palace of Westminster. I raise the subject this evening because the comprehensive London bus service, integrated with the Underground, is under threat and its quality is likely to deteriorate beyond any failings that it has at the moment; I shall deal with those failings later in my speech.
The Government have made it clear, not least through the London Regional Transport strategy document, that they want the separation of bus and Underground—inevitably and mischievously the separation of ticketing schemes such as Travelcard and Capitalcard—and then the fragmentation of London Buses Ltd. into 11 companies ripe for sale or franchise, quite apart from the privatisation of individual routes.
There is no doubt about the path that the Government want LRT to take. Let me illustrate the point. The No. 24 bus route runs past the Palace of Westminster. It is to go out to tender. The company that ran the No. 24 bus route will be split off, sold off and fenced off from the Tube and the ticketing arrangements for the Underground. It seems to me absolutely crazy that all that should be happening in the very heart of London.
The LRT strategic annual review 1988–91 spells out the plan in all its stark madness:
One of the main objectives of deregulation is to promote competition and thereby increase efficiency of operation and match services more closely to passenger demands. Although tendering of bus services has introduced competition amongst operators in London, LBL is still very dominant. A high level of competition, therefore, is only likely to be achieved if LBL is subdivided into a number of companies which can then compete with each other. Work is well in hand for restructuring LBL as a prelude to the formation of a dozen or so companies"—
it is now to be 11—
which could be sold to separate owners"—
I emphasise separate owners—
after deregulation in order to ensure competition.
I do not believe that that is competition. It is transport vandalism on a grand scale. If I want to go from Brixton to Croydon within the area of one fragment company, I do not see how it helps me to know that I can go from Brixton to Tower bridge under the auspices of another fragment company. There is no competition at all.
Still worse, concessionary fares and pensioners' passes —emotive and important issues—services for the disabled such as Dial-a-Ride, common information for tourists and Londoners alike, training and safety standards, ticketing, policing, repairs and recruitment will all become a nightmare. All this havoc will be done for the short-term profit of the new private operators. It will be profit and cost-cutting at the expense of service and to the detriment of London as a commercial, industrial, educational and tourist centre, to which good public transport is indispensible.
London has grown profitable and successful partly because of its public transport services. Every capital city

needs a comprehensive and subsidised bus and underground system. That has been borne out by a recent publication by the London advisory planning committee:
It is clear that the promotion and accommodation of economic growth has very important implications for transport requirements and the degree of congestion in London particularly Central London. Without substantial new management initiatives and rehabilitation programmes in the short term, and major rail investments in the medium term, investor confidence is likely to drop in London's World City role.
That comes from a Government planning committee at the same time as the Government are contemplating the fragmentation of London's bus transport system.
What we need is a better transport system. We need more investment, more new lines, reliable vehicles and fully staffed crews. The pressure on the Underground at the moment is quite intolerable. The lesson is that we need to build on what we have rather than destroying what we have by splitting bus services into 11 units, as LRT proposes, auctioning them off and reducing the service.
Nothing in the splintering will deal with the recruitment crisis facing London buses as a result of wage levels, working conditions and hours, which place busmen at a disadvantage compared with those in other jobs. The new companies will want to drive wages down and demand even more on competition. The explosion in housing costs makes matters even worse. I do not know where a new recruit busman could rent accommodation in my constituency. Accommodation is simply not being provided by local authorities because of cuts in housing investment programmes. I do not know either where he could afford to buy property, given that £60,000 is the minimum price for a flat.
Perhaps I may describe some of the problems in my locality and that of Mr. Speaker, problems that I want to get London Buses Ltd. to tackle rather than giving in to the Government's wishes.
Four months ago, London Buses was almost 1,000 drivers short. In my area of Streatham, there was a shortage of 18 drivers, or 7·4 per cent. of establishment; in Brixton, 12 drivers, or 6·5 per cent.; Stockwell, as many as 41 drivers short, or 13·8 per cent.; Camberwell, 19 drivers; Thornton Heath, 14 drivers; Merton, a high-cost area, 42 drivers, or 14·1 per cent. of establishment; Norwood, 34 drivers, or 16·7 per cent.; and the central London minibus was 23 per cent. short of establishment. Those shortages were despite massive recruitment campaigns and a reduction in both recruitment and training standards.
The staff turnover of London Transport bus drivers is running at about 25 per cent. annually in many garages, reflecting inadequate wages, the stress and strain of driving in London, and the extraordinarily unsocial hours.
The engineering membership of the Transport and General Workers Union suggests that accidents involving buses have more than doubled in the past three years and that lower training standards, with resultant lower driving standards, must be a major factor.
Despite carrying more passengers because of the pressures on London's transport system, the scheduled mileage has been reduced from 166 million miles to 162 million miles, and whereas in 1984–85 94·3 per cent. of the 166 million miles was run, in 1987·88 only 91 per cent. of the 162 million miles was run. As a result, average passenger waiting time increased to 7·4 minutes.
We face the prospect of more passengers paying more money for worse services—and that is even under the


existing system. Plans for the coming year are for further cuts in south London bus services on the ground of "spare capacity". The objective is to achieve average loads of from 56 to 60 passengers per bus during the rush hours, but, to obtain that average, more passengers will have to wait for the third, fourth or even fifth bus before they can board.
In the case of my local services, those affected are the route 159 from Thornton Heath to West Hampstead via Brixton; route 59 from Purley to the city via Croydon and Brixton; route 133 from Streatham to London bridge via Brixton; and route 68 from Croydon to Euston via Norwood. On all those routes, unbelievably, the number of buses per hour is to be reduced at peak times because London Buses says that there is "spare capacity". That means that passengers who have paid in advance for their bus passes or Capitalcards will not enjoy the level of service that existed when they paid for them. It is rather like airline passengers, having paid for a flight to Paris, being told once they have boarded the aircraft that their tickets will take them only to Calais. Those changes can mean only more aggravation and stress for drivers, yet London Buses is to be split into 11 separate companies in 1988–89, ready for privatisation in 1990–91.
That fall in the level of services and cost-cutting is to prepare London Buses for its sale as an economic, profit-making company at the expense of the travelling public. The dangers to the public from staff shortages, inadequate training and cuts in services are clear. A safe and efficient bus service is needed if London is not to come to a halt.
Because of falling public transport standards, more private transport is taking to London's roads, and the problems of illegal parking are well known. Average journey speeds in London are now down to 11 mph, and anyone who travels on or follows behind a one-person operation bus will know the reasons for that. Average road speeds in central London during peak times are about 8 mph—the same as when London's traffic was horse-drawn.
We read in the papers that we shall be able to get from the centre of London to the centre of Paris in two and a half hours. If one travels by bus, I doubt whether one could get from Wembley to Purley in the same time, especially if present trends continue.
If livestock was transported in the dangerous and overcrowded conditions that exist on our underground system and on some of our buses, there would be an outcry and laws would be passed to make such conditions illegal.
I want enough safe and competent bus crews to ensure a safe and adequate transport system which will meet the needs of Londoners, with the emphasis on service. The Minister should call for an end to the senseless dicing and slicing up of the London bus system. The Government should call a halt to LRT's increase in bus fares, which will make the 11 companies easier to sell off. Given the fabulous tax cuts for richer Londoners, what justice is there in a fares rise in the current year of 9 per cent. —twice the rate of inflation—and plans for fares to rise by 17 per cent. in real terms in the next 18 months?
London's united red bus network is the blood in the arteries of London. What the Government are making LRT do is little short of cutting London's lifelines. The Minister should abandon the unfair increase in bus fares that will be borne by the travelling public and the senseless fragmentation of London's bus services and should

concentrate upon a socially necessary network of buses around London. That network should be determined by a political process and not simply by a removed and unaccountable LRT.
London-wide through-ticketing should be developed and it should be valid on the Tube and the bus. Free pensioner passes and half fares for children should be continued, with the participation of all London bus operators. Transport for disabled people should be preserved and improved by LRT. Fragmentation would do nothing for them. Comprehensive, accurate, up-to-date, London-wide maps and timetables should be provided by LRT for all services. Subsidy levels should be significantly increased to allow for a socially necessary network to plug the gaps in services that will be left by private, commercial operators.
This is an opportunity for the Minister to make an announcement to show that he cares for London more than he cares for his ideology, which involves splitting up London transport for profit at the expense of service.

The Minister for Public Transport (Mr. David Mitchell): I am grateful to the hon. Member for Norwood (M r. Fraser) for giving me this opportunity to talk about public bus transport in London and to set the record straight on a number of issues on which the hon. Gentleman has been misled or has misled himself.
This is indeed a time of change for London's bus services, and I have strong reason to believe that those changes will be for the better. There are already ample signs that that is so. For many years the story was one of struggle to maintain conventional services in the face of declining patronage—20 per cent. down between 1974 and 1983—and rising unit costs, which increased by 19 per cent. in real terms in the same period. All that has already changed, and the further measures which we and LRT are taking, to which I shall refer tonight, will bring further benefits to London's bus users.
Bus patronage is at its highest for 10 years, at 2,870 million passenger miles last year—18 per cent. up on 1983. Real unit costs have come down by 15 per cent. in the same period. However, a higher proportion of timetabled services are actually being operated—93 per cent. last year, against 82 per cent. in 1979 when the Greater London council was responsible for them. Services are also much more closely matched to demand. Reliability is also much improved. Waiting times have been reduced by over a minute to 7·1 minutes. There are a number of ways in which that has been achieved. LBL's management now adopts a much more professional approach and the passenger is getting the benefit. Long routes have been split up to minimise the effect of traffic delays and so improve reliability, local networks have been created to serve suburban centres, high frequency minibus services have been introduced both by LBL and on tendered services and have proved extremely popular with passengers, and more one-person operated—OPO—buses have been introduced and have proved to be cheaper to run, safer in operation and more reliable.
It is well established that the absence of competition engenders complacency and Inefficiency. One policy that has made an outstanding contribution to all those improvements has been the encouragement of competitive tendering for bus routes. It has given the private sector an


opportunity to participate in the provision of bus services, and LBL the stimulus to become more efficient and provide a better service. Tendered services have proved to be more reliable, not less, on average than those operated directly by LBL, they cost less than before—by about 15 per cent. so far—and they encourage innovation, such as the introduction of midibuses. Many of these routes, as a result, have benefited from an increase in patronage. LRT expects to have put out to tender a quarter of bus routes by March 1989, and there will be more to come. I hope that the hon. Gentleman will join me in congratulating LRT on the extent to which it has put routes out to tendering and the substantial benefits that have come to his constituents and other bus users as a result.
The hon. Gentleman referred to the proposed restructuring of LBL. There is a limit to what can be achieved while London Buses remains a huge, dominant provider of bus services. The next stage in introducing improvements involves a fundamental change in the structure of LBL, which will aim to facilitate more localisation of services and encourage competition and, therefore, efficiency.
LBL recently announced the formation of 11 new management units with devolved responsibility to replace the existing structure of five districts. These new units, each between three and six garages grouped in a logical pattern, will be able to operate more like local bus companies, smaller and closer to their customers than the present monolithic LBL. Each will have separate management, separate accounts and its own targets to meet. They will be encouraged to compete against one another for business, and will be free to produce their own innovations. They will also benefit in due course from a reduction in costs as central administration is reduced.
There is no evidence of any significant economies of scale in bus service operations. There is certainly no reason why London needs to be served by one huge operation the size of LBL—the largest bus company in western Europe. The hon. Gentleman is stuck in the thinking of two decades ago if he thinks that large means good. Small, with all the flexibility that can bring, has been proved in recent years to be of far greater benefit to the users of these services. The success of tendered services, operated by private operators and semi-independent LBL sub-units, suggests that there is no magic in continuing the old monopoly of service provision.
The hon. Gentleman made a number of predictions about what would happen when LBL is restructured, although I believe that he is actually looking further ahead to deregulation in making those charges, and that is not a matter for debate tonight. We have yet to bring forward detailed proposals for deregulation, and when we do the House will be able to discuss them. The restructuring of LBL is an organisational and managerial change that can be only beneficial.
The hon. Gentleman is in error on two particular points. First, he referred to the colour of buses in London. I am not aware that LBL's plans include any change of colour. It has no monopoly on the colour red.
The hon. Gentleman set up a scare that restructuring would lead to fragmentation of routes. When there is adequate demand for a through route, it is likely to be provided. If the hon. Gentleman wants to travel on more

than one route, he must either buy a pass or be prepared to buy more than one ticket. What is wrong with that? If he wants to travel on more than one route now, he must buy more than one ticket—if he does not purchase a pass. There will be no change. I hope that the hon. Gentleman will put that scare back in the bag and feel that he can reassure his constituents on that score.

Mr. Fraser: Will the fragmented companies, as I have described them, be compelled to take part in a common pass scheme?

Mr. Mitchell: I shall come to that point. I understand the hon. Gentleman's anxieties. He is also worried about concessionary fares and travel passes, and I shall deal with them first.
The restructuring of LBL will make not one iota of difference to concessionary fares and travel passes. The concessionary fares will still be funded by the boroughs and organised by LRT. The new LBL units will still be under the umbrella of LRT, and their participation in Travelcard and the like will be unaffected by the change.
On the question of deregulation, we have already said that a Londonwide concessionary fare scheme will be protected in law. There is no reason why operators should not participate in multi-operator travel pass schemes.
The hon. Gentleman also referred to safety. Talk of a lack of safety is a complete red herring. The size of a bus company is no guide to its attitude to safety. In 1984 the Department of Transport's vehicle examiners issued prohibition notices—not warnings—on 50 per cent. of a sample of LBL buses on which it had carried out spot checks. I doubt whether there are many other companies in the country, small or medium sized, with such an appalling problem. Fortunately, London Buses has improved considerably in this respect since then. All bus operators must comply with the same stringent rules on vehicle safety, and all PSV drivers must pass the same test and medical requirement. Those requirements will not be affected by restructuring or deregulation.
LRT is responsible for administering or funding a number of services for the disabled, such as Dial-a-Ride, Airbus, Carelink, Taxicard—which is funded by the boroughs—and the Mobility bus. None of those services depend on LBL, and there is no reason why independent operators should be reluctant to take LRT's money for providing them. I am sure the hon. Gentleman would not suggest that they should be. It follows that there is no threat to the services. Restructuring will have no effect on LRT's statutory duty to have due regard for the transport needs of disabled people.
The hon. Gentleman was rightly concerned about the recruitment of bus drivers. Shortages of staff for London buses are unfortunately not new. They have been with us in varying degrees for 30 years. Earlier this year the effective shortage was about 600 drivers, but that was reduced to just over 500—4·;6 per cent. —by mid-June. Since the beginning of June a vigorous recruiting campaign by London Buses, promoted by Nigel Mansell, has been successful in generating no fewer than 5,500 inquiries—more than four times the usual level—leading to 3,000 firm job applications. I hope that the hon. Member will join me in congratulating LBL on its initiative in introducing that sort of recruiting campaign.
Almost every aspect of London's bus services has improved considerably in recent years, particularly since


the GLC ceased to be responsible for them and professional operators have been running the system. Patronage is at the highest for 10 years. Costs have been reduced, and, more important, services have improved. Much of that improvement has been brought about by the management of London Buses Ltd. but much has been stimulated by LRT's policy of seeking competitive tendering for certain bus routes and by the prospect of deregulation, which has been such a success elsewhere in the country. It is, I think, casting its shadows before it in the way that is leading to a recognition in LBL, and among all who are involved, that there are more efficient ways of operating services, which provide higher standards for the customer.
The changes taking place in LBL will now give added impetus to a process that has already started, and are designed to bring further improvements in efficiency, reliability and quality of service, at less cost to the taxpayer and ratepayer. In short, I can reassure the hon. Member for Norwood that London's comprehensive bus service is not under threat, and I trust that he will be able to take that reassurance back to his constituents. I am sure that he would not wish to mislead them into fearing that there might be a threat, which does not exist.

Question put and agreed to.

Adjourned accordingly at four minutes to One o'clock.